Vietnam Stock Market poised to go higher

On June 26, Vietnam announced that it would ease the curbs on foreign ownership of its companies as it sought to boost inflows to the nation’s stocks and an upgrade to emerging-market status. Foreign investors can increase holdings in “a number” of industries to 100 percent from 49 percent effective in September. For more, go here & here.

The run-up to this announcement saw the Vietnam stock market index breaking above its intermediate downtrend line, RR at 580.


 Chart 1: Vietnam stock market index's daily chart as at July 9, 2015 (Source: Tradingeconomics.com)

If we look at the long-term chart for Vietnam stock market index, we can see that this index is on the verge of testing its multi-year cup-with-handle resistance at 635 640. The last time this index broke above the formation (in 2007), it rallied from 650 to 1170. Can it break to the upside of this formation?
 

 Chart 2: Vietnam stock market index's monthly chart as at July 9, 2015 (Source: Tradingeconomics.com)

There are 2 ways to play the bullish breakout of the Vietnam stock market. One way is to buy into Market Vectors Vietnam ETF (VNM listed in NYSE) and the second way is to get into DBXT FTSE Vietnam ETF 10 (HD9 listed on SGX). If we look at Chart 3, we can see that VNM has a breakout at 18.00-18.30 in mid-June. Similarly, we look at Chart 4, we can see that HD9 has a breakout of the intermediate downtrend line at 25 at the same time. HD9 is closer to home but fairly illiquid. VNM is further afield but it has a bit more liquidity.


Chart 3: Market Vectors Vietnam ETF's weekly chart as at July 10, 2015 (Source: Stockcharts)

 
Chart 4: DBXT FTSE Vietnam ETF 10's weekly chart as at July 10, 2015 (Source: Stockcharts)

Based on the above, I think it is worthwhile to get into the Vietnam stock market, by buying Market Vectors Vietnam ETF (VNM, listed on NYSE). If the Vietnam stock market index can break above the 640 mark, I think the Vietnam stock market may put in a strong rally.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, DBXT FTSE Vietnam ETF 10 and/or Market Vectors Vietnam ETF.