Northern bourse changes index computation
The Ha Noi Stock Exchange has adjusted its method for computing the HNX-Index, effective on Friday, in an effort to minimise the influence of titanium miner Sai Gon-Quy Nhon on the movement of the index.
Sai Gon-Quy Nhon (SQC) first listed 100 million shares on the Ha Noi market on December 17 of last year and immediately became the market's second most heavily-capitalised stock, following Asia Commercial Bank (ACB).
In accordance with the Passche method of calculating a stock market index, the HNX-Index reflected all 100 million SQC shares listed on the exchange, accounting for over 10 per cent of total market capitalisation on the Ha Noi Stock Exchange.
This meant that every change in SQC shares, however small, was reflected clearly in the HNX-Index and was giving the share inordinate influence on index movement, said the exchange's Deputy Director, Nguyen Vu Quang Trung.
Based on the exchange's observations, Trung said, the HNX-Index had failed to accurately reflect the market situation recently due to the share's heavily-weighted impact.
The exchange found that SQC shares had impacted the HNX-Index in 25 of the 63 sessions since its first listing day, Trung said.
But only 11.25 per cent of the total SQC shares listed were actually subject to being traded on any given day on the market, he added. The remainder of the shares were restricted from being re-transferred by shareholders within the first two years they were issued.
Effective yesterday, the exchange decided to reduce the weight of SQC shares reflected in the calculation of the HNX-Index from 100 million to 11.25 million, reducing the company's share of total market capitalisation to only about 1 per cent.
"We decided to make this reduction basing on this reality, and the company agreed," Trung said. "This adjustment, starting yesterday, should help ensure a correct reflection of actual market changes, reducing losses to investors."
The number of SQC shares used in calculating the HNX-Index would be increased upon the expiry of the trading restriction on the shares, he added.
The HNX-Index gained 0.05 per cent in yesterday's trading, closing at 163.76, while SQC shares rose 6.11 per cent to VND134,900 per share.
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