Vietnam’s stock market unaffected by Chinese bourse chaos

VietNamNet Bridge - The VN Index has been decreasing in recent trading sessions, but this is not because of the Chinese stock market. Some analysts hope the $3 trillion worth of capital leaving China will head for Vietnam.

Vietnam, Chinese stock market, capital flow

The VN Index lost 1.13 percent points on July 8, the sharpest decrease since May 18, according to

Nguyen Duc Hung Linh, analysis director of the Saigon Securities Incorporated (SSI), said he could not see any relation to the chaos in the Chinese stock market.

Major Chinese stock indexes dropped sharply by 5.9 percent on July 8, despite the Chinese government’s drastic measures to stop the market decline.

Bui Nguyen Khoa from BIDV Securities Company also noted that there is no direct communication between Vietnamese and Chinese stock markets.

Khoa noted that the Chinese stocks have been increasing too sharply over the last eight months because of the Chinese central bank’s move of easing interest rates. Easing requires compulsory reserve ratios.

Khoa said that the Chinese stock market problem would in no way affect Vietnam.

Meanwhile, Tran Minh Hoang from Vietcombank Securities Company, noted he can see higher risks from the possible “bubble bursting” of the Chinese asset market which includes stock, real estate and other markets. 

“If this happens, Vietnam will surely be seriously affected,” he said, adding that China is a neighboring country which has large trade relations with Vietnam.

However, Hoang thinks China has resources powerful enough to settle the problems.

A question has been raised about whether Vietnam can take advantage of the foreign investor capital leaving China.

Tuoi Tre newspaper quoted deputy general director of the HCM City Stock Exchange Le Hai Tra as saying that this would depend on investment strategies followed by investment funds and institutional investors.

However, Tra noted that conditions in Vietnam are getting better to receive the capital if it goes out of China. 

The government of Vietnam, for example, in June 2015 released a decision on allowing foreign investors to hold up to 100 percent of shares in Vietnamese public companies in unconditional business fields.

Phan Dung Khanh, the investment director of Maybank KimEng Securities Company, when asked to comment about Vietnam’s ‘attractiveness’ in foreign investors’ eyes, noted that the VN Index had maintained its upward trend while the other regional markets all had been decreasing.

“This helps attract the world’s attention,” he noted. “Foreign investors will see they can make a profit in Vietnam, which they cannot do now in other markets where the stock prices are on the decrease.”

Kim Chi

Vietnam, Chinese stock market, capital flow