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| VietnamETF Sectors Allocation |
The FTSE Vietnam ETF Index(VietnamETF) gained over 3% with above average volume last Friday, but traders might do well to not be seduced by that one-day mirage from the downtrodden VietnamETF.
During last Asian trading Monday, Vietnamese stocks market sank deeply on an ongoing territorial dispute with China. Vietnam stock market Index (VNI NDEX) sank 4.6% at 10:44 a.m. local time and this was the lowest close since early January.
The impact on VietnamETF, the lone Vietnam ETF, is becoming palpable. Despite last Friday’s pop, VietnamETF lost 2.4% last week. The ETF’s average second-quarter loss over the past four years is 7.6%, another Second-Quarter Slump for the Vietnam ETF.
This year, Vietnamese equities are dealing with a new set of second-quarter blues, namely tepid appetite by foreign investors for initial public offerings of state-run companies. Vietnam’s plans to loosen foreign ownership limits on state-controlled companies were seen as a major catalyst in VietnamETF’s stellar performances late last year and early this year. Those factors come in addition to the territorial flap with China.
VietnamETF’s struggles come as other frontier markets ETFs are delivering decent returns. Over the past month, VietnamETF is off 12%, but the Global X Nigeria Index ETF (NGE) is up 1.4% while the Global X FTSE Argentina 20 ETF (ARGT) is up 1%. The iShares MSCI Frontier 100 ETF (FM) , the largest frontier ETF, has jumped 9% over the past three months as VNM has wilted over the same period. Vietnam is FM’s tenth-largest country weight at 1.74%.