24 funds exit Vietnam’s PNJ stock as retail investors step in

Shares of Phu Nhuan Jewelry Joint Stock Company (PNJ) have rebounded for three consecutive sessions, including hitting the ceiling price in Friday trading, after suffering a steep decline in July.

PNJ fell from VND63,000 (US$2.4) at the end of June to VND31,000 ($1.19) at the end of July, a drop of 50.8 percent.

The decline followed heightened concerns after authorities announced that a former executive of PNJ Laboratory Company Limited, or P-Lab, had been prosecuted in a diamond-smuggling case.

With about 511.72 million shares outstanding, PNJ’s market capitalization shrank by roughly VND16.38 trillion ($620 million) during the month.

PNJ has also warned that product buybacks could continue to affect its third-quarter performance.

Funds cut PNJ exposure sharply

Investment funds sharply reduced their exposure to PNJ in July, with 24 funds fully exiting the stock and total fund holdings falling by more than half.

At the end of June, 50 domestic and foreign investment funds held a combined 64.45 million PNJ shares, equivalent to 12.6 percent of the company’s outstanding shares.

By the end of July, only 26 funds remained invested, with their combined holdings falling to about 28 million shares, or 5.47 percent.

The 24 funds that fully exited PNJ had held 36.71 million shares at the end of June, accounting for nearly 57 percent of all PNJ shares held by investment funds at the time.

Among the 26 funds that retained their positions, 10 increased their holdings, six reduced them, and 10 made no changes. Their combined holdings edged up by around 262,000 shares.

Exchange-traded funds (ETF) increased their exposure during July, while holdings by non-ETF funds plunged nearly 88 percent, leaving more than 80 percent of the remaining fund-held PNJ shares in ETF portfolios, with a large concentration in FUEVFVND.

The total value of PNJ shares held by investment funds fell 78.6 percent, from about VND4.06 trillion ($155.4 million) at the end of June to VND868 billion ($33.2 million) a month later.

Of the roughly VND3.19 trillion ($122.1 million) decline, about VND2.06 trillion ($78.9 million) resulted from the falling share price, while VND1.13 trillion ($43.3 million) was attributable to funds reducing their holdings.

Domestic retail investors step in

PNJ trading activity surged as funds and foreign investors sold shares.

About 230.26 million PNJ shares changed hands in July, 10.7 times the June volume and equivalent to nearly 45 percent of the company’s outstanding shares.

Trading value reached nearly VND8.93 trillion ($341.8 million), more than six times the previous month’s level. On July 24 alone, more than 41.3 million shares worth around VND1.27 trillion ($48.6 million) were traded.

Selling pressure dominated PNJ trading during the month.

Investors placed sell orders for about 403.4 million shares, 31.8 percent more than the 306.1 million shares in buy orders.

Domestic individual investors provided the strongest counterweight to the sell-off.

Foreign investors sold a net 28.4 million shares through order-matching transactions, worth about VND1.057 trillion ($40.5 million), while domestic institutions posted net sales of around VND85 billion ($3.3 million).

Meanwhile, domestic individuals bought a net 27.1 million shares worth VND1.129 trillion ($43.2 million), and securities firms’ proprietary trading desks recorded net purchases of about VND13 billion ($0.5 million).

The trend reversed in August.

By August 20, PNJ had climbed to VND37,300 ($1.43), up 20.3 percent from the end of July.

Foreign investors switched to net buying of around VND301 billion ($11.5 million) during the first 20 days of August, while domestic individuals became net sellers of about VND227 billion ($8.7 million).

The renewed foreign interest also altered PNJ’s major-shareholder structure.

On August 13, a group represented by T. Rowe Price Associates bought another 525,300 PNJ shares, raising its ownership to nearly 26 million shares, or 5.07 percent of the company.

A day later, a group represented by Sprucegrove Investment Management increased its stake to more than 25.8 million shares, equivalent to 5.04 percent.

Vanguard International Value Fund alone bought more than 1.51 million additional shares, lifting its holdings to 21.86 million shares.

As of August 20, PNJ was trading at a price-to-earnings ratio of about 6.58 times, below the 9.38 times level representing one standard deviation below its 10-year historical average.

Despite its August rebound, the stock remained 40.8 percent below its end-June price.