The system of CBV-Indexes includes CBV-total, embracing more than 195 listed companies, indexes for individual industries and indexes for companies. This is not a new idea in international stock markets, but it has been introduced in Vietnam by the Bien Viet Securities Company, in order to help investors have a more details for investment decisions.
Mr Do Thanh Trung said small Vietnamese investors often make practical investment decisions for their portfolios based on personal analyses and personal information sources. Mr Trung confirmed the practicality of the indexes, such as the VN-index or HASTC-index, in giving investors a general market overview, although they have no direct influence on investment decisions.
Another investment form which small investors may select is investment funds. Investors may purchase shares of these funds, where portfolio management is assigned to the fund management company. Mr Trung said small, young and active investors often do not select this form. They prefer to make their own decisions, rather than invest in these funds. The majority of fund investors have little time to play the stock market, many are pensioners with a fixed amount of savings and see fund investments as moderate risk with sufficient return. To ensure profitability and avoid high risk, investors often make investments in portfolios including certain selected companies. However, this kind of portfolio selection is not applied much or it is based on personal analyses, and the indexes such as VN-index and HASTC-index in practice are not actually useful for small investors. Because there are too many companies included in VN-Index and HASTC-index (currently there are 109 companies in VN-Index and 86 companies in HASTC-Index), so investment based on VN-Index and HASTC-Index is difficult for small investors.
At same time, at today’s level of knowledge and expert analysis, it is not certain that every investor has the ability to build a good portfolio for himself. Understanding the deep adjustment in Vietnam’s stock market, Bien Viet Securities’ Company has introduced a system of indexes for portfolios including CBV-Total, CBV-smallCap Growth and CBV-smallCap value, and CBV-indexes for individual industries. It is a new investment approach attracting attention from investors. According to experts in stock investment, the number of companies offering personal portfolios is not too high. Therefore, to support personal investors, Bien Viet Securities Company has introduced 13 kinds of indexes with different features. The system that includes the indexes CBV – TOTAL, based on more than 195 companies listed in all two exchange boards, and the CBV indexes based on 50 companies and individual indexes for industries. The CBV has divided the listed companies on Vietnam's stock market into 10 industrial groups. A CBV index is also built for groups of companies with a smaller number of companies, but accounting for significant transaction volume of the market, in particular, CBV-20 and CBV-10 picked out of 50 companies in CBV–index.
In addition, Bien Viet Securities Company has also introduced growth indexes and value indexes built for the group of 10 or 15 companies with the biggest average P/B ratios in the 6 last months, or having the highest market price in comparison with the book value of stock. A high P/B ratio (Price–to–Book ratio) reflects market expectation of company growth.
How may investors use the CBV index? Instead of individual stocks, investors can invest in indexes, such as the CBV Small Cap Growth, with a portfolio of 10 growth companies out of 30 companies on CBV Small Cap having the highest average P/B ratio for the last 6 months, or having the highest market price in comparison with the book values of the stocks.
To select stocks for investment, Vietnamese investors often still depend on subjective and personal information, but in today’s deep stock market adjustment, the system of indexes and investment portfolios introduced by Bien Viet Securities Company is becoming increasingly common among investors at home and abroad.
Van Chien
Vietnamese
