US newswire sees positive signs in Vietnamese stock market
Hanoi (VNA) - Vietnam
stocks are among the best performers in Southeast Asia to start 2024, and the VanEck
Vietnam ETF (VNM) is participating in the rally, reported the US’s etftrends.com
on March 19.
As of March 15, the original ETF dedicated to Vietnam
equities is beating the MSCI Emerging Markets Index by a margin of better than
3-to-1 this year. That index is the gauge to which Vietnam is angling for a
market classification promotion.
The financial services sector, specifically brokerage firms,
is one of the groups leading the way in Vietnam this year. That’s good news for
VNM investors because that’s the ETF’s largest sector exposure, at a weight of
27.63%.
According to the newswire, there are a few reasons Vietnamese
banks and brokerage firms are rallying in the first quarter. One is that rising
liquidity in the previously illiquid market. Another is expectations Vietnam
will, at the very least, be promoted to emerging markets status by FTSE Russell
at some point this year. The country is currently classified as a frontier
market.
Bloomberg said the liquidity boost and retail trading boom
have benefited the overall market as well, with the VN Index the
best performer among benchmarks in Southeast Asia this year. The daily trading value of
Vietnamese stocks hit an almost seven-month high on March 8 while the new
brokerage account openings reached 113,300 last month, up 80% from a year ago.
Further supporting upside for VNM and its financial services
components this year is a belief among market observers that the long-awaited
promotion to the emerging markets designation is bringing more local retail
investors into Vietnamese markets.
On a global basis, there is significantly more capital
allocated to emerging markets funds — active and passive –than there is to
comparable frontier markets products. If Vietnam earns the desired emerging
markets promotion, fund managers and issuers that benchmark to indexes that
will be new homes to Vietnamese equities must buy those stocks, including some
VNM holdings.
The country is also making technological strides in its
capital markets. And those strikes aim to lure more global investors and enhance
liquidity.
“The nation plans to introduce a platform that can handle 3-5
million orders per day, compared with the current capacity of about 1 million,
and make settlement smoother. The central bank, meanwhile, has carried out four
rounds of policy easing, helping spur an economic rebound and lure more
individual investors”, according to Bloomberg./.