The first depository receipt (DR) listed on the Stock Exchange of Thailand (SET) will be an exchange-traded fund (ETF) of blue-chip stocks listed on the Ho Chi Minh City Stock Exchange (HSX), issued by Bualuang Securities (BLS).
The security has already been filed for fundraising with the Securities and Exchange Commission for a total investment worth around 5 billion baht.
The fund will invest in the VFMVN30 ETF, which was launched and managed by VietFund Management Company (VFM). The fund invests in the top 30 large-cap stocks in diversified sectors such as food and beverages, tobacco, banks, real estate and transport.
VFM said the VFMVN30 ETF is the first domestic ETF replicating the performance of the VN30 Index, which comprises the 30 highest-liquidity stocks in the Vietnamese stock market. The fund has no foreign ownership limit.
The VN30 index is the price index established and managed by the HSX. As of Oct 31, the index had total market capitalisation of US$44.2 billion (1.45 trillion baht), accounting for 76.6% of the HSX's total market capitalisation.
Bannarong Pichayakorn, managing director for sales and trading at BLS, said the company will conduct its first DR roadshow this Friday at the SET headquarters.
"The DR has long-term investment value because it invests in large-cap stocks through an ETF. We are confident Vietnam will be among high-growth countries in Asia, with annual economic growth of 6%," said Mr Bannarong.
DR is a type of negotiable and transferable financial security traded on a local stock exchange, but represents a security, usually in the form of equity, that is issued by a foreign publicly listed company.
DR investment has foreign exchange risks associated with currency depreciation.
For the past five years, the Vietnamese dong depreciated by around 10% against the greenback, but listed companies' net profit grew at a faster pace, said BLS.
Rinjai Chakornpipat, managing director at Thailand Futures Exchange, said the price of DRs will depend on the fundamentals of underlying securities and foreign exchange rates.