Prolonged trade war threatens VN market
SHARES in Vietnam are forecast to suffer this week after negative developments in Sino-US trade relations.
Vietnam’s benchmark VN-Index on the Ho Chi Minh Stock Exchange finished last week down 0.09 per cent to close at 974.34 points.
The index had lost a total of 1.69 per cent on a weekly basis.
An average of 207.5 million shares was traded in each session on the southern bourse, worth 5.4 trillion dong ($230.8 million).
According to Nguyen The Minh, head of analysis at Yuanta Securities Vietnam Co, the market will be strongly affected by recent geopolitical developments, especially the escalating Sino-US trade war.
This may dampen investor sentiment and increase caution, Minh told news site tinnhanhchungkhoan.vn.
MBS Securities Market Strategy Division professional senior market researcher Ngo Quoc Hung said despite the spreading wave of lowering interest rates by central banks over the world, Sino-US trade tensions and the fluctuation of China’s yuan is making investors nervous.
Global stock markets have experienced st rong decl i nes i n recent weeks, high bond prices have caused sharp fa lls in interest rates and safe assets such as gold and Japanese yen have risen sharply, Hung said, adding t hat t hese factors will continue to i nf luence t he evolut ion of t he domestic market next week.
“I f t he world market does not experience bad developments, the loca l market is a lso less l i kely to decline,” Hung said.
‘Global financial system affected’
Focus is being shifted to the rising net selling of foreign investors, which started early this month.
The total net sell value during the last two weeks reached 1.5 billion dong, two thirds of which was last week, the strongest net sale value since the beginning of the year.
According to Nguyen Hong Khanh, head of market analysis at Vietnam Internationa l Securities Joint Stock Company (VIS), in the past week the global financial system was affected by t rade tensions bet ween China and the US.
This has caused global economies a nd equ it ies markets to become more volat i le, including Viet nam, Khanh said.
“One of the most worrisome factors now is China devaluing the yuan, following threats from US President Donald Trump to impose new 10 per cent tariffs on $300 billion worth of Chinese products starting on September 1,” Khanh said, adding that this will fuel tensions between Beijing and Washington while signalling the possibility of a currency war.
“If the exchange rate becomes unstable, it will directly affect the flow of foreign indirect investment into Vietnam’s stock market,” he said.
Although the market has corrected in the past two weeks, some stock groups absorbed the cash flow quite well, which shows that the market has differentiation and the cash flow is still looking for opportunities in specific codes with growth potential.
According to Yuanta Securities Vietnam Co analysis head Nguyen The Minh, industrial zone real estate stocks recorded the strongest rise last week.
“I suppose that this group of stocks will continue to attract cash flow. However, the expected rate of return might be not as high as this group of stocks has increased sharply since the beginning of the year,” Minh said.
The group of industrial zone real estate stocks were on an upswing last week, including Sonadezi Corporation (SNZ) (+17 per cent), The Vietnam Rubber Group (VRG) (+14 per cent), Construction company Becamex IDC Corp (IDC) (+2.9 per cent), The Vietnam Rubber Industry Group JSC (GVR) (+7.2 per cent) and Kinh Bac City Development Holding Corp (KBC) KBC (+2.3 per cent).