Vietnam is a peculiar country, filled with potential, thanks to its population of 100 million people and growing. For those interested in investing in Vietnam, we analyze its most important stock market indices.
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Introduction
Located in Southeast Asia, Vietnam went through many difficulties throughout the second half of the twentieth century. It was the epicenter of a long civil war in which the United States participated very actively, and after which a communist regime prevailed and ruled the country.
In addition to that, just 15 years after the end of the civil war came the collapse of the Soviet Union, one of the country’s main allies. As a result, the Vietnamese authorities had to adapt to the situation.
Fortunately, Vietnam was able to replicate some of the reforms that had already been implemented in China and were beginning to bear fruit. That meant orienting the economy towards free market mechanisms and starting to accept foreign investment.
Thanks to all this, the Vietnamese economy has grown considerably since the late 1980s, and especially since the beginning of the 21st century. This has led to a significant improvement in the standard of living of the majority of the population.
Nowadays, Vietnam is beginning to industrialize and export manufactured goods. It also has considerable oil reserves that can be extracted and exchanged for foreign currency with the goal of developing its domestic economy. Hence, there are many reasons to be optimistic about Vietnam’s future.
At the same time, it is a highly populated country, with almost 100 million people. It has the potential to become a regional power in the coming decades.
As far as stock market activity is concerned, there is still a lot of room to grow. Vietnam has two major stock exchanges, located in the cities of Hanoi and Ho Chin Minh.
For those interested in investing in Vietnam passively through an ETF, we analyze its most important stock market indices.
HNX 30
The HNX 30 is a stock market index composed of the 30 largest companies listed on the Hanoi Stock Exchange.
It is important to bear in mind that many of them have low levels of liquidity, so it can be difficult for us to invest directly in some of them.
Unfortunately, the Hanoi Stock Exchange does not publish much information about the HNX 30. Here is the link to its official website.
VNX 50
The VNX 50 is a stock market index composed of the 50 largest companies listed on the Hanoi and Ho Chin Minh Stock Exchanges. These companies must meet minimum liquidity criteria, and have a sufficient percentage of their shares listed on the stock exchange.
Companies are weighted according to their free float-adjusted market capitalization. But we must bear in mind that a cap of 10% is imposed on the weight that any single stock can have within the index.
The VNX 50 is updated twice every year. You can find more information, including the 50 companies in the index, under this link.
MSCI Vietnam
Finally, the MSCI Vietnam is a stock market index calculated by the US company MSCI. The number of stocks within the index is not constant, but fluctuates over time.
Thus, the MSCI Vietnam is composed of all Vietnamese companies that are part of the global MSCI Frontier Markets index of developing countries. We can find about 20 stocks in it.
Stocks are weighted based on their free-float-adjusted market capitalization. And updates are carried out regularly throughout the year with the goal of keeping the indices representative of developing stock markets.
Some of the largest companies in the index are Vietcombank and Vinhomes.
Additional details about the MSCI Vietnam can be found on MSCI´s website.
I hope you found this post about Vietnam stock market indices useful. To learn about stock market indices in other promising countries, check out the following section:
Funds and ETF
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