Korea Investment Management Co has launched a Vietnam futures exchange-traded fund (ETF) that allows Korean investors to capitalise on the Southeast Asian country’s economic growth and bypass foreign investment limits in its market.
The KINDEX Vietnam VN30 Futures Leverage ETF is benchmarked against the Bloomberg VN30 Futures Index.
It’s the first launch of a Bloomberg index product in South Korea, the index provider says in a statement on November 25.
According to Seongin Jeong, head of ETFs at Korea Investment Management, Vietnam’s economy has “tremendous potential”, driven by its economic reforms, its role in the Southeast Asian supply chain, and its draw as a destination for foreign direct investment.
The new ETF gives Korean investors the opportunity to capitalise on Vietnam’s “accelerating growth, which consistently outpaces” many of its peers in the ten-member Association of Southeast Asian Nations, or ASEAN.
Ji Zhuang, Bloomberg’s head of indices for Asia Pacific, adds that the fund also allows Korean investors to invest in Vietnam’s derivatives market without foreign investor limitations.
Foreign investors can currently only own up to 49% in Vietnamese stocks and derivatives.
Average trading volume of derivatives on the Hanoi Stock Exchange rose 12.6% year-on-year to 88,740 contracts per session in 2019, and then surged almost 95% to 173,000 contracts in the first seven months of 2020, according to figures from the bourse.
“The strong growth of Vietnam’s derivatives market has also attracted foreign capital inflows, particularly for products simulating the VN30 Index [stock market benchmark],” Mr. Zhuang says.
Korea Investment Management, one of South Korea’s largest assets managers, had US$50 billion of assets under management as of end-September.