Will VNM ETF afford to buy 11.1mln KLS shares?

It is questionable that will Market Vectors Vietnam ETF (VNM ETF) raise enough money to afford the plan of selling 1 million KLS shares and buying 11.137 million KLS shares from April 12 to June 12
It is questionable that will Market Vectors Vietnam ETF (VNM ETF) raise enough money to afford the plan of selling 1 million KLS shares and buying 11.137 million KLS shares from April 12 to June 12  as Kim Long Securities said on its website.

VNM ETF currently held $785,000 cash  as of April 19, Van Eck Global data showed. However, a net buy of 10 million KLS will cost the fund around $4.6 million.

To prepare that amount of money, VNM ETF can either: 1)raising fund from new investors or  2) selling shares in the portfolio.

StoxPlus thinks it is difficult for Van Eck Global fund managers to raise such a big money in just 2 months in the context that its fund certificate’s NAV continuously fell from early 2011, down 11.3% year-to-date.

In case of restructuring the portfolio, VNM ETF will have to sell high liquid blue chips such as BVH, DPM, HAG, which could hammer its NAV.

VNM ETF’s top 5 stocks

VNM ETF currently holds 9,516,000 KLS shares or 4.7% stake, if the net buying comes true it will raise the holding in KLS to 19,653,500 shares or 9.6% stake.

KLS closed up 3.2% to VND9,700 on average on April 20 with 2.6 million shares traded

Tags: VNM ETF