Vietnam Readies First ETFs

October 1st at 8:11am by Tom Lydon

Vietnamese regulators have reportedly accepted exchange traded funds to launch on the local stock market, long after other foreign markets have traded them. Analysts believe that the release of these funds will bring value to the local Vietnamese stock market while mobilizing capital.

“Yuta Seki from the Nomura Capital Market Research Institute said on Thoi bao Kinh te Vietnam that though he still has not made any detailed calculation about the impacts of ETF on the Vietnamese market, he still believes that ETF would bring added value and help develop the stock market in the future,” reports C.V. for VietNamNet Bridge.

Vietnamese regulatory agencies have finally designed and completed the framework to trade ETFs, 10 years after other foreign markets have introduced them. The experts think that the ETF is a very attractive investment and will bring value to the Vietnamese stock market.

Most of the reasons that funds have been launched there are the same reasons why the ETF has proliferated in other global markets. Low management costs, a topic that is currently hot, is a big reason an ETF is advantageous to investors. The convenience and flexibility are other traits that give ETFS an edge over other funds. They are able to trade throughout the day with the ease of a single transaction. [International ETFs That Help Diversify]

Also, this type of fund allows using the mobilized capital more effectively. Unlike closed-end and opened-end funds, which always have to keep certain amounts of cash, ETFs can put all the mobilized capital into investment, reports VietNamNet Bridge. The transparency that ETFs have allow investors to move into and out of the funds in a timely and effective manner. The volatility of the stock market is conducive to investors needing and wanting a fund that allows them this freedom. [Vietnam ETF Tries to Breakout]

Most of all, ETFs will allow more opportunity to attract foreign investment to Vietnam.

Currently, there is one single-country ETF trading in the United States that tracks Vietnam. The Market Vectors Vietnam (NYSEArca: VNM) is down about 10% this year, after the recent banking scandal brought down its performance. [Vietnam ETF Slide on Banking Scandal]

Market Vectors Vietnam

 

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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