ETF Monitor – VNDiamond 3Q22 review: NLG likely to replace TCM

• VNDiamond ETF experienced large outflow of VND1,613bn in 3Q22 amid Vietnam market downturn.
• In the review which new basket will be disclosed on 17 Oct, we expect NLG will be added, while TCM might be excluded.

Large outflow from VNDiamond ETF in 3Q22

As of 30 Sep 2022, DCVFM VNDiamond ETF reported NAV of VND14,820bn, and an outflow of VND1,613bn in 3Q22. The large outflow could be explained by recent weak performance of Vietnam stock market under the negative impact of interest rate hike and VND downward pressure. VNDiamond index plunged 16.3% ytd, outperforming the VNINDEX (-27% ytd), VN30 (-27.6% ytd) and VNMidcap (-35.4% ytd).

Total Vietnam ETFs experienced a softer outflow of VND169bn in 3Q22; largely dragged down by VNDiamond, while other ETFs still recorded positive inflow despite market turbulence.

We expect NLG in while TCM out, in VNDiamond 3Q22 review

The new VNDiamond index basket will be announced on 17 Oct 2022 and be effective since 07 Nov 2022. Based on data until 30 Sep 2022, we expect:

• TCM is likely to be removed. TCM’s 12-month average free float adjusted market capitalisation is estimated below VND2,000bn which fall out of the requirement about market capitalization.

• NLG might be included into VNDiamond basket in this review. This non-bank stocks will be added after removing TCM as VNDiamond need to maintain at least 8 non-bank stocks in the basket. We believe NLG is the most potential candidate that relatively meet the requirements of VNDiamond and have highest foreign ownership ratio among non-bank stocks.

DCVFM VNDiamond ETF will rebalance its portfolio on 04 Nov 2022. In this review, we estimate DCVFM VNDiamond ETF will newly buy 5.4m shares of NLG. Additionally, 10.2m and 5.5m shares of TCB and GMD, respectively, might be added.

On sell side, about 617,500 shares of TCM will be sold. Notably, the DCVFM VNDiamond ETF might offload 36.9m, 3.3m and 1.8m shares of VPB, MWG and REE, respectively in this review.

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