Curtain lifted on VIR50 Index

Vietnam Investment Review last week announced that the VIR50 Index would cover the 50 biggest stocks in terms of market capitalisation and liquidity, which represent 80 per cent of the Ho Chi Minh City Stock Exchange (HoSE) and Hanoi Securities Trading Centre (HaSTC).

“VIR50 Index, starting its life at the initial 1,000 point mark, will represent the moves in stock prices, not the change in trading volumes,” said Nguyen Anh Tuan, VIR editor in chief, who is also an index council member.
Of the 50 biggest market cap stocks, ACB is the largest, followed by STB, VNM, DPM, FPT, SSI, PPC, PVD, VIC and PVS, according to VCB Securities statistics.

“The pool of VIR50 Index’s stocks will be regularly revised to ensure the true contributions to the index,” Tuan said, adding that the index would be updated automatically at http:// www.tinnhanhchungkhoan.vn
“Securities investors now have an additional useful reference index along with others such as VN Index and HaSTC-Index,” Ton Tich Quy, deputy director of State Securities Commission’s Securities Training and Scientific Research Centre and a VIR50 Index council member said.

VIR plans to later build other specific indices covering financials, banking and consumer goods.
Vietnam’s stock market has few indices for investor referencing. The official VN Index represents the movement of all stocks trading on HoSE, while HaSTC-Index covers all HaSTC listed stocks.

“The creation of more specific indices, such as banking or finance stocks, was necessary for a modern stock market as investors can trace their stock investments more easily. There should be more [indices] built,” said Vu Bang, chairman of the State Securities Commission
Bien Viet Securities Company, a local brokerage in early 2007 started to build its own indices such as CBV Index, CBV Growth or CBV Values for investors.

FTSE Vietnam Accessible Index was the first Vietnam equity index for foreign institutional investors launched by Citi in May 2007.
Vietnamese stocks FPT, GMD, PVD, REE, SAM, SIS, STB VNM and VSH were included on S&P/IFCG Extended Frontier 150 by Standard & Poor’s, a world’s leading index provider in August, last year.
HoSE, Vietnam’s main stock exchange, is considering building an international standardised index, especially for foreign investors.

With the expectation of new indices, market watchers said the index investment funds would soon find ways to enter Vietnam’s stock market. The VNIndex closed up 23.3 per cent in 2007, after shooting up 144 per cent in 2006.

“In 2008, Vietnam’s stock market had potential to become a very profitable year despite several challenges such as inflation, fiscal deficits and an appreciating currency that will have to be addressed,” said an equity strategist at Ho Chi Minh City Securities Corporation.