The Ho Chi Minh Stock Exchange (HOSE) has introduced three new stock indices developed based on the investment requirements of local funds.

Illustrative image (Source: HOSE)

They are the Vietnam Leading Financial Index or VNFIN Lead, Vietnam Financial Select Sector Index or VNFIN Select and Vietnam Diamond Index or VN Diamond.

The first two are based on HOSE's VNAllshare Financials Index and the condition that each stock’s market capitalisation ratio will not exceed 15 percent of the index.

VNFIN Lead includes at least 10 constituent securities. Any company added to it must have at least 10 billion VND (431,716 USD) worth of daily trading and a minimum turnover ratio of 0.1 percent.

The VNFIN Select Index, with at least 17 constituent securities, requires constituent stocks to have a minimum market cap of 500 billion VND (21.59 million USD) and minimum trading value per session of 1 billion VND.

To be included in the VN Diamond Index, stocks must meet certain conditions in terms of market cap, transaction value and foreign ownership.

They should also have foreign ownership of at least 95 percent of the permitted limit and the remaining stake that foreign investors can buy should not be worth more than 500 billion VND.

The market cap of individual stocks is 15 percent of the index and an industry must not exceed 40 percent.

According to HOSE, the creation of indices based on the needs of investment funds is an inevitable step taken by stock exchanges around the world to meet the market’s diverse needs.