Editor’s Note
This article outlines the Ho Chi Minh City Stock Exchange’s announcement regarding the constituent stocks and key calculation parameters for the VN Diamond Index, effective November 4, 2024.
The Ho Chi Minh City Stock Exchange (HoSE) has announced the list of constituent stocks for the VN Diamond Index, effective from November 4, 2024. The announcement includes details on the free-float volume for index calculation, the free-float share ratio, market capitalization weighting limits, weighting limits based on the Foreign Ownership Limit (FOL), weighting limits for stocks under review for maintenance, new inclusion, or pending exclusion, and weighting limits based on liquidity.
Accordingly, the stock of Mobile World Investment Corporation (MWG, HoSE) has been re-included in the index basket. Meanwhile, the stock of Vincom Retail (VRE, HoSE) has been placed on the pending inclusion list. The total number of stocks currently in the VN Diamond basket is 19.
MWG’s stock was previously excluded from the index during a restructuring in April 2024 for failing to meet the Price-to-Earnings (P/E) ratio requirement.
Recently, HoSE announced version 3.0 of the VNDiamond Index composition and management rules to improve the Vietnam Diamond Stock Index (VNDiamond Index). This version replaces version 2.1 announced on September 30, 2022, primarily updating aspects related to liquidity conditions and criteria for selecting index constituents.
Version 3.0 adds several new definitions for net profit per share (EPS) to the P/E ratio regulations in section 3.6.1. Simultaneously, it adjusted some parameters and scales in the index calculation formula by adding the wS parameter and setting an upper limit to the price index calculation formula. It also adjusted the wFOL scale in the index calculation formula and added the wS parameter to the TRI index calculation formula.
MWG’s inclusion in the VN Diamond Index had been predicted by several securities firms.
According to BIDV Securities Company (BSC), MWG’s inclusion in this period is based on criteria aimed at increasing the diversity of the index basket, considering the group of stocks subject to the 40% market capitalization weighting limit within the same sector (the banking group in this review period) and the stock with the highest FOL coefficient.
Meanwhile, SSI Research had previously predicted the possibility of MWG’s stock being included in the index in the future. This assessment was based on the fact that MWG’s stock met the P/E ratio requirement (a ratio indicating the relationship between stock price and earnings per share) under the new index inclusion regulations.
Currently, there are a total of four ETFs in the market using the VN Diamond Index as a benchmark: DCVFM VN Diamond ETF (FUEVFVND, size VND 13 trillion), MAFM VN Diamond ETF (FUEMAVND, size VND 443 billion), BVFVN Diamond ETF (FUEBFVND, size over VND 56 billion), and KIM GROWTH VN Diamond ETF (FUEKIVND, size VND 106 billion).