What is VN-Index? This is the main stock index of the Ho Chi Minh City Stock Exchange (HoSE), reflecting the market value and price movements of listed stocks. VN-Index is not only a tool to evaluate economic efficiency but also an important indicator for financial allocation and risk management for investors.
1. What is VN-INDEX?
Define What is VN-Index? Specifically, it is a stock index that represents the fluctuations in stock prices of companies listed on the Ho Chi Minh City Stock Exchange (HOSE). Its operation is based on a comparison between the total market capitalization at any given time and the base capitalization on July 28, 2000. The main purpose of VN-INDEX is to provide an accurate and general measure of the health and trend of the Vietnamese stock market, helping to clearly reflect the daily increase and decrease in stock value.
Via VN-INDEX, investors can understand how many times the current market capitalization value has increased or decreased compared to the starting point (July 28, 2000), thereby providing an overview of the market's movements. This is an indispensable tool for every investor when deciding to buy, sell or hold stocks, and at the same time helps them assess the growth potential or risk of the market in the future.
2. Formula for calculating VN-INDEX
VN-Index is calculated based on the market capitalization value of stocks listed on the Ho Chi Minh City Stock Exchange (HOSE), with the following specific formula:
VN-Index = (Current market capitalization / Base market capitalization) x 100
In there:
- The total market capitalization of listed stocks is calculated by multiplying the stock price by the number of outstanding shares of each company listed on the HOSE.
- Base total market capitalization is the total market capitalization on the base date (July 28, 2000).
- The base index value is usually set at 100 points or some other pre-selected specific number.
The detailed formula is as follows:Vn-Index =
In which: P1i: Current price of iQ stock1i: Circulating volume (listed volume) of iP shares0i: Price of stock i in base periodQ0i: Volume of stock i at base period
This formula allows calculating the change of VN-Index based on the fluctuations of stock prices and the number of outstanding shares. The VN-Index will increase when the total market capitalization increases, which usually happens when the stock prices of one or more listed companies increase. Conversely, this index will decrease when the stock prices decrease. Changes in the index VN-Index are closely monitored throughout the trading session to most accurately reflect the market situation at all times.
3. Compare VN Index, S&P 500; Dow Jones; Nasdaq
Below is a comparison table of the VN-Index stock index, S&P 500, Dow Jones, and Nasdaq:
| Criteria | VN-Index | S&P 500 | Dow Jones | Nasdaq |
|---|---|---|---|---|
| Nation | Vietnam | America | America | America |
| Scope of listed companies | All companies listed on HOSE | 500 largest companies listed on US stock exchanges | 30 major US industrial companies | Technology and non-technology companies of all sizes |
| Index properties | Stock market overview | Stock market overview | Industry Overview | Technology and Innovation Overview |
| How to calculate | Market capitalization | Market capitalization | Average value | Market capitalization |
| Market capitalization (as of 04/2023) | Depends on the market capitalization of listed companies | 31.4 trillion USD | 9.2 trillion USD | 19.9 trillion USD |
| Rate of increase after 2009 crisis | Fluctuations according to the Vietnamese economy and market | More than 400% | More than 300% | More than 600% |
| Daily trading volume (as of 04/2023) | Volatility by trading activity | Average about 3 billion shares | Average about 1 billion shares | Average about 4 billion shares |
Comparison between VN-Index, S&P 500, Dow Jones, and Nasdaq stock indexes based on factors such as country, scope of listed companies, index characteristics, calculation method, market capitalization, price increase rate after the 2009 crisis, and daily trading volume provides insight into the characteristics and role of each index in reflecting the economic and financial market situation.
VN-Index, Vietnam's stock index, which includes all companies listed on HOSE and reflects the overall Vietnamese stock market. Its flexibility and volatility according to the local economy make VN-Index an important tool to monitor Vietnam's economic health.
The S&P 500 and the Dow Jones are both US indices, but they differ in the scope of companies listed and how they are calculated. The S&P 500 includes the 500 largest companies and is calculated based on market capitalization, which broadly reflects the health of the US economy. The Dow Jones, with 30 large industrial companies, uses a weighted average, which is more historically representative and industry-focused.
Nasdaq, which focuses on technology and non-technology companies of all sizes, reflects the innovation and health of the technology sector, is an index with a large market capitalization and impressive growth rate after the 2009 crisis.
In terms of daily trading volume, Nasdaq leads with high trading activity and excitement, followed by S&P 500, showing strong investor interest and activity in the US market.
In conclusion, each stock index has its own characteristics reflecting different parts of the financial and economic markets. VN-Index, with the flexibility and diversity of the Vietnamese market; S&P 500 and Dow Jones, with the representation of the vast and deep US economy; and Nasdaq, demonstrating innovation and growth potential, all create a diverse and rich picture for investors to monitor and analyze.
4. How to buy stocks in the VN-index
To buy stocks in the VN-Index, you need to follow these steps:
- Open a securities trading account: Choose a reputable securities company in Vietnam to open an account. You will need to provide personal information as well as identification documents such as ID card/CCCD or passport.
- Market Research: Before investing, take the time to research the stock market in general and the specific stocks in the VN-Index that you are interested in. Review financial reports, technical analysis, and other fundamental factors.
- Deposit funds into your trading account: Deposit funds into your securities trading account to start buying stocks. This can be done via bank transfer or other payment methods supported by the securities company.
- Place a buy order: Use the online trading software or mobile application provided by the securities company to place an order to buy stocks. You will need to enter the stock code, the quantity you want to buy, and the desired price (or choose to buy at the market price).
- Monitor and manage your portfolio: After purchasing, regularly monitor the price movements of the stock and news related to the company as well as the stock market to make timely decisions to sell or hold the stock.
Important Note:
- Investing in stocks carries risks. Invest cautiously and allocate capital wisely.
- Consider using an investment advisory service if you are just starting out or want more in-depth information and analysis.
- Always comply with the regulations and instructions of the securities company and the Vietnamese securities regulatory agency.
By following the above steps, you can start investing in stocks in the VN-Index and seek financial growth opportunities in the Vietnamese stock market.
