ETF capital expected to increase, affect the stock market

The newly set indexes, plus the possibility of the market upgrading, have led observers to believe that ETF will attract foreign capital.

There are two domestic ETFs and five foreign ETFs, which means funds listing in the US, South Korea, Hong Kong and Europe, operating in the Vietnamese market.

ETF capital expected to increase, affect the stock market

The capital flows to ETF in 2019 (Source BVSC)



Securities firms believe that the investment in ETFs is a growing tendency thanks to the low investment cost and the ability to save time in selecting stocks and managing investment portfolios. Fund managers also pay higher attention to bluechips when the stock market capitalization value increases.

“We hope that foreign investors’ activities will become more active when key ETFs can attract money from Thailand and South Korea, and we expect new ETFs, reserved for finance shares and shares with no more room for foreign investors, to be approved early this year,” the report by Rong Viet Securities says.

According to Rong Viet, there are two reasons for E1VFVN30 ETF to lure cash flow from two regional countries. First, the interest rates in Thailand and South Korea are at low levels as the central banks of the two countries have made a series of cuts.

Second, major indexes showed that in 2019, VN Index brought higher profits than SET and KOSPI.

Based on the new indexes just launched by the HCM City Stock Exchange (HOSE), SSIAM is completing the procedures to set up an ETF which specializes in making investment in the biggest shares in the finance sector.
 

The selection of shares beneficial from ETF cash flow is believed to be a good investment for this year. 

Based on the new indexes just launched by  the HCM City Stock Exchange (HOSE), SSIAM is completing the procedures to set up an ETF which specializes in making investment in the biggest shares in the finance sector.

VFM is also preparing to manage two ETF in accordance with Vietnam Diamond Index (which comprises 14 shares that foreign investors cannot buy because the foreign ownership ratios have reached the ceiling), and Vietnam Financial Selector Index.

Not only targeting some specific fields, SSIAM, Mirae Asset and Techcombank Securities are also considering introducing the ETF products with reference to VN30 Index.

Bao Viet Securities commented that the launch of new indexes by HOSE brings opportunities for ETFs to be born and attract more capital. The ETF capital will increase significantly to have effect on the market, especially if MSCI adds Vietnam to the watchlist for market upgrading, or FTSE officially upgrades the Vietnamese market into an emerging market.

Analysts say that Kuwait is sure about the possibility of being upgraded into MSCI Emerging Market in the upcoming May review. Therefore, Vietnam’s proportion in the stock market may be upgraded to 30 percent. ETFs are believed to buy shares selectively and improve liquidity in the Vietnamese market.

Linh Ha 

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