BlackRock recently announced the dissolution of the iShares Frontier & Select EM ETF, a fund specializing in investing in frontier and emerging markets, which invested nearly 20% of capital in the Vietnamese market.
Asset management giant BlackRock recently announced the dissolution of the iShares Frontier & Select EM ETF, a fund specializing in investing in frontier and emerging markets, which invested nearly 20% of capital in the Vietnamese market.
In the announcement, BlackRock said that this ETF will cease trading and will no longer accept orders to create and redeem fund certificates after the market closes on March 31, 2025. However, the announcement also emphasized that the roadmap is subject to change.
“During the liquidation period, the iShares MSCI Frontier and Select EM ETF will no longer be managed in accordance with its investment objective and policies as the fund will sell off its assets,” BlackRock said in a statement. According to BlackRock’s decision, proceeds from the liquidation are expected to be distributed to shareholders approximately three days after the last trading day.
As of June 10, the iShares Frontier & Select EM ETF had a total net asset value (NAV) of more than 425 million USD, equivalent to about 10,300 billion VND. Of which, 18% invested in Vietnamese stocks, equivalent to about 76 million USD, about 1,900 billion VND.
Before the dissolution, the fund sold all Vietnamese stocks, with a total volume of 10.8 million shares, or 20% compared to the holding on June 10 of 53.6 million shares. The codes sold the most by volume were HPG with 3 million shares, VHM with 2.1 million shares, and VRE with 1.1 million shares.
Launched 12 years ago, iShares Frontier and Select EM ETF started out as iShare MSCI Frontier Markets 100 ETF and benchmarked against the MSCI Frontier Markets 100 index. In March 2021, the fund changed its name to the current iShares MSCI Frontier and Select EM ETF and expanded its stock selection to include emerging and frontier markets, with the benchmark index being MSCI Frontier & Emerging Markets Select Index.
According to experts, the closure of this ETF will not affect the Vietnamese stock market because the NAV is not large, only about 1,900 billion VND.
The ETF closed amid foreign investors net selling VND40,500 billion worth of Vietnamese stocks, equivalent to USD1.6 billion, since the beginning of the year.
The stock that foreign investors have sold the most since the beginning of the year is VHM with a net selling value of approximately VND11,000 billion, of which more than VND8,000 billion worth of shares were net sold by matching orders. Next on the list of net selling by foreign investors is FUEVFVND fund certificate with a net selling value of nearly VND5,500 billion. Two other bluechip stocks, VNM and MSN, were also net sold for more than VND5,100 billion and more than VND3,300 billion, respectively.
Similarly, strong net selling value of foreign investors was also recorded in a series of other stocks such as VRE (~2,700 billion), FUESSVFL (~1,900 billion), FPT (~1,900 billion), VND (1,800 billion).
In May 2024 alone, foreign investors net sold more than VND 15,590 billion on the HoSE and more than VND 3,690 billion on the Upcom, while net buying more than VND 269 billion on the HNX. The codes that foreign investors net bought the most in May 2024 included MWG, DBC, HVN, NLG and IDC. On the other hand, the codes that foreign investors net sold the most in May 2024 were VHM, CTG, MSR, ABB and VPB.
On the contrary, the accumulated net buying of individual investors in the past 12 months also continued to increase to VND 57,665 trillion.
SSI Research maintains a cautious view on capital flows into Vietnam's ETFs, however, the net withdrawal intensity will be more limited than in Q2. Positive signals may begin to appear when the macro environment (exchange rate and interest rate) or political fluctuations become more stable. In particular, Vietnam may benefit when the trend of profit-taking and seeking other investment opportunities appears in the Taiwanese market.
For active funds, the difference between investment capital flow and foreign transactions comes from the following two main reasons: active funds have only restructured their portfolios but have not withdrawn capital from Vietnam and statistics are delayed (such as the period of Q2 and Q3/2023).
Interest rate, exchange rate and political risks are the biggest factors affecting capital flows into Vietnam at the present stage. On the positive side, the expectation is that the second draft of the circular allowing securities companies to implement payment support for institutional investors will be announced soon.
Source: VnEconomy
