Phat Dat Real Estate Development Corporation proposed to MSCI Frontier Market 100 index

Recently, world leading index research and analysis organization, Morgan Stanley Capital International (MSCI), has proposed the inclusion of Phat Dat Real Estate Development Corporation (ticker: PDR) into the MSCI Frontier Market 100 index within their most recent October report. Following, PDR is amongst the two new entries to Vietnam Top 28 listed companies in the index following Kuwait’s promotion to Emerging Market category. Until 28/10/2020, PDR’s market capitalization has reached VND 15.625 trillion (approx. USD 670 million). 

According to MSCI’s calculation, Vietnam’s ratio within the MSCI Frontier Markets 100 Index and MSCI Frontier Market Index shall increase to 28.76% and 25.2% respectively, following Kuwait’s reduction to 0%. Vietnam’s current ratios in each index are 12.53% and 17.5% respectively, ranking 2nd after Kuwait. MSCI Frontier Market Index includes 89 stocks within the mid- and large-cap market capitalization group in 28 Frontier Market countries. These stocks compose of approximately 85% of total market capitalization post-adjustments for each country’s free float rates. Meanwhile, MSCI Frontier 100 Index includes stocks with the highest market capitalization and liquidity on the market, being selected from the MSCI Frontier Markets Investable Market Index that fulfills additional requirements for free float rates and foreign ownership room. The number of constituents of this index are only allowed ranging from 85 to 115 tickers.

Currently, iShares MSCI Frontier 100 ETF, the only ETF fund that is directly monitoring MSCI Frontier Markets 100 Index with approximate AUM of USD 380 million, is expected to acquire a significant quantity of Vietnamese shares, including PDR. Additionally, there are many other active funds, total AUM approximately USD 4 billion, utilizing the MSCI Frontier Markets Index as main index of reference. Primary examples include Schroder ISF Frontier Markets Equity (USD 410 million), Templeton Frontier Markets Fund (USD 356 million), Baring International Umbrella Fund (USD 330 million), and Magna Umbrella Fund PLD – Magna New Frontiers Fund (USD 290 million). These funds’ upcoming decision to invest into Vietnamese stocks are dependent on their respective fund manager. However, in the short term, stocks in these indices will benefit directly first.