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ETF Monitor – OCB likely to be added in VNDiamond next review

Strategy Note 30/03/2022    86

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  • According to our estimates, OCB will likely be added into VNDiamond index, while KDH, NLG and CTD might be excluded.
  • We estimate DCVFM VNDiamond ETF will buy 9.6m shares of OCB while selling CTD, KDH and NLG with 4.1m, 5.7m and 6.2m shares.

We expect a strong capital inflow into VNDiamond in 2022
As of Mar 22, DCVFM VNDiamond ETF (Exchange traded fund) stayed firm as at the largest ETF in term of NAV (net asset value) with VND14,963bn. Since beginning of 2022, the VNDiamond ETF has enjoyed about VND759bn inflow, just behind Fubon ETF with VND1,313bn inflow.

In 2022, we expect a strong capital inflow from Thai investors into VNDiamond thanks to the launching of DR (Depositary Receipt) Diamond fund. According to Bualuang Securities, one of Thailand largest securities firms, they are going to launch DR Diamond fund based on the DCVFM VNDiamond ETF fund certificate. IPO registration schedule was during 22 Mar to 24 Mar, then the DR will be listed in the near future.
DR Diamond is the second DR of Bualuang Securities, after the first DR VN30 based on the DCVFM VN30 ETF (E1VFVN30) was launched in 2018. Bualuang Securities reported to raise about VND3,500bn in DR VN30 to buy DCVFM VN30 ETF fund certificates in 2018.
In term of indexes, VN Diamond grew 5.1% ytd, outperforming the performance of VNindex (-1.8% ytd) and VN30 (-3.7% ytd).

OCB will likely to be in; while KDH, NLG and CTD might be out

The new VNDiamond index basket will be announced on 18 Apr 2022, and then come into effect since 04 May 2022.
Based on data until 28/03/2022, we estimate OCB will be included into VNDiamond in this review as OCB meets all VNDiamond’s criteria.
On the other hand, KDH and NLG miss the VNDiamond‘s foreign ownership requirements. The average foreign owned ratio/max foreign ownership limit should be greater than 80% to stay in VNDiamond index. CTD also will likely be excluded as its FY21 P/E ratio is greater than 3.0x of average market P/E.

Per our estimates, DCVFM VNDiamond ETF, with a total net asset value of VND14,963bn will rebalance its portfolio on 29 Apr 2022. In this review, we estimate DCVFM VNDiamond ETF will newly buy OCB with about 9.6m shares and also net buy REE, PNJ with about 6.7m and 2.7m, respectively.

On the other hand, CTD, KDH and NLG will be offloaded about 4.1m, 5.7m and 6.2m shares, respectively.

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