Vietnam’s stock market drops dramatically because of US-China trade war

Since the peak on April 9 with the peaks of 1,204 points, VN-Index has evaporated nearly 300 points, equivalent to 25% decrease, equivalent to more than US$ 30 billion in just over two months and became the worst performing market in the world in the same period.

The VN-Index has slipped from the 900 points level. (Photo: Thanh Tri)

The VN-Index has slipped from the 900 points level. (Photo: Thanh Tri)

In the second quarter of 2018, the stock market in Vietnam was the most gloomy  market in terms of decline in the world with nearly 18% when the VN Index plunged from 1,174.46 points to 960.78 points in the session last June (followed by China with the Shanghai index down 9.91%, Thailand down 9.7%, the Philippines down 9.85%). By the end of the first trading week in July, the VN Index had fallen to 917 points.

While in the first 3 months of 2018, the VN Index was the world's biggest gainer with over 19%. From the beginning of 2018 to now, VN-Index has been fluctuating around the level of 900 points and has reached this milestone twice, latest on July 3 last. With this fierce competition, not only retail investors but also large investment funds have been plagued by the waves of the market. Not only the results in the first three months of the year but also the profit in 2017 also suffered corrosion.

Ha Minh, an investor with nearly four years of experience in the stock market, said in the past two months, his account not only lost 25% of its net profit for the whole of 2017 and 3 months in early 2018 his “wallet money” is currently almost continues to lose by 30% more. The amount of "concave" in his account was up to several billion VND.

Commenting on the sharp decline of the Vietnam stock market, Tran Van Dung, Chairman of the State Securities Commission, said that the main reason is due to the foreign investors’ withdrawal from the Asian market in general. Vietnam tolerates the double effect of two events occurring in June 2018, namely the Fed increasing operating rates and international trade tensions especially the US-China trade tension.

There are more and more concerns about the US-China trade war that causes a negative impact on Asian stock markets. In addition, the US Federal Reserve's (FED) surge in interest rates has prompted investors to raise their investment requirements in risky markets such as Asia.

In fact, the stock market in Vietnam fluctuations in the past has a small cause from the transaction of foreign investors. Statistics of securities companies from April 9 to July 5, July 7 showed that foreign investors have bought a net VND 23.960 billion on the Ho Chi  Minh City stock market (HoSE).

However, there are optimistic predictions of the VN stock market.

In this regard, representatives of Viet Capital Securities (VCSC) also informed that despite the trend of foreign capital flows out of emerging markets, in June foreign investors in Vietnam sold only US$ 4.5 million. In the first 6 months of 2018, the net buying value of foreign investors on the HoSE market was $ 1.6 billion, while in other ASEAN markets, foreigners net sold $5.6 billion in Thailand, $ 3.6 billion in Indonesia, $1.2 billion in the Philippines.

Commenting on the stock market in the coming time, he said that the business results of quarter 2 of 2018 as well as the last 2 quarters of the manufacturing, retail and banking sectors will cause a positive impact on the market... However, business circle is worrying that the stock market will be affected by the inflation and more importantly the fluctuation of the exchange rate. From the beginning of the year, the VND / USD exchange rate has increased by 2.1%.

CEOs of Pyn Elite Fund also predicted that although Vietnam stock market is on the downward trend, the Vietnam stock market in the past five years used to be on the upward trend and investors can expect this to continue thanks to the strong economic growth, reasonable pricing and profit growth of listed companies. According to estimates of Pyn Elite, the actual target of the VN-Index will surpass the peak set in 2018 and reach beyond 1,700 points in the coming years.

translated by Dan

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