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HCM City to launch new stock indices

Update: September, 27/2013 - 08:16

The HCM City Stock Exchange yesterday announced that next year it would deploy five new indices, named the VNMidcap, VNSmallcap, VN100, VN-Industry and VNAllshares, during a meeting in Ha Noi.—File Photo

HA NOI (VNS) — The HCM City Stock Exchange yesterday announced that next year it would deploy five new indices, named the VNMidcap, VNSmallcap, VN100, VN-Industry and VNAllshares, during a meeting in Ha Noi.

The set of indices followed international practices and would provide more information for investors, said the exchange president Tran Dac Sinh.

Similar sets of indices exist around the world, such as the FTSE Bursa Malaysia Index Series and the Morgan Stanley Capital International Index, he added.

Among more than 300 listed stocks, the exchange will select many to be included in the VNAllshares Index, which will then be divided into different sectors to form the VN-Industry. The VN30 and VNMidcap will be the components of the VN100 Index.

Shares eligible for the set are not subject to warning, control or trading suspension by the exchange within three months prior to the assessment.

They must be listed on the exchange for at least six months. Newly listed shares that are in the top five for market capitalisation will be considered if they have been listed for at least three months.

In February last year, the VN30 was introduced to the market, tracking stocks with good quality. "Among the top 10 companies in terms of making profits in the first six months of this year, eight belonged to the VN30's calculating basket," Sinh said.

The initial success of the index was to create conditions for establishing new products such as index funds, exchange-traded funds (ETFs) and derivatives, he added.

This year, the Vietnam Fund Management Company set up the Vietnam Active Fund to invest 30 per cent of its net asset value in the VN30. In addition, Circular 229/2012/TT-BTC on the establishment of ETFs, which took effect on September 1, has opened door for the operation of these funds.

The stock exchange and fund management companies are expected to generate ETFs in the first quarter of next year.

However, the VN30 only tracks the bourse's 30 largest shares by capitalisation and liquidity, while investors demand for investment information about mid- and small-cap shares and shares categorised by sectors.

"The new indices will allow investors to understand where their money can flow to besides the VN30," said VietDragon Securities Co deputy general director, Nguyen Huu Tu.

In addition, companies selected to be tracked by the indices would raise a higher sense of transparency obligation and liquidity to retain their spot. — VNS

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