In its quarterly review of the FTSE Vietnam Series for March 2020, index compiler FTSE Russell has announced that FLC Faros Construction (HOSE: ROS) has been removed from the FTSE Vietnam Index.
FLC Faros, a Vietnam-based construction company, was added the the FTSE Vietnam Index (as well as the MSCI FTSE Frontier Markets Index) in March 2017 after it listed its initial public offering (IPO) on the Ho Chi Minh Stock Exchange in September 2016 and experienced a 13-fold increase in its market capitalisation in the space of two months. The good times did not last however, as net profits fell by 78% in 2018 (to just under $8 million) and continued to decline in 2019 when Q4 sales fell by 7%, a steeper decline than costs.
FLC Faros’ share price is currently trading below its IPO level. Its removal from the FTSE Vietnam Index means that the company only lasted three years in the Index. The company had a weight of 0.57% in the Index as of the 31st December 2019, the smallest weight out of the 19 companies that make up the FTSE Vietnam Index.
There were also two removals from the FTSE Vietnam All-Share Index, the broad market benchmark that covers the top 90% of the eligible universe by full market capitalisation: Tien Phong Commercial JSB (Ticker: TPB) and Binh Minh Plastics JSC (Ticker: BMP). Changes will be applied after the close of business on Friday 20th March 2020 and will be effective on Monday 23rd March 2020.
As previously mentioned in FTSE’s December 2019 review of the FTSE Vietnam Index Series, Vietnam is still on FTSE’s watch list for a potential upgrade to an Emerging Market. According to FTSE Russell, more work needs to be done in the areas of clearing & settlement, as well as improving registration of new accounts and tackling the foreign ownership limit for investors in Vietnamese companies. Despite the wait, it is still the largest constituent country in the FTSE Frontier 50 Index.