Covid-19 wipes out $44 billion from Vietnam’s stock market

As the covid-19 epidemic has been escalating, the market capitalization value has been sliding. Market losses have reached $44 billion.

The trading session on March 24 morning was very quiet. Investors seemed to have calmed down from a panic attack.

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One day before, the market lost $10 billion worth of capitalization value. Since the market resumed its operation after Tet holiday, the stock market losses have topped VND1,000 trillion, or $44 billion.

On March 23, the VN Index dropped by 43.14 points, or 6.08 percent to 666.59 points. This was the third trading session which saw decreases of over 5 percent after Tet holiday and pulled the VN Index down to a 3-year low.

The trading session also witnessed more than 200 shares on the HCM City bourse falling down to floor price levels. Twenty seven out of 30 shares belonging to VN30 fell down to the floor prices and 25 had no buyers.

SAB, VJC, SCS, VNM and BHN were the five shares seeing the sharpest price decreases. Of these, two shares are in the brewery industry (SAB and BHN), two in aviation (VJC and SCS) and the remaining in the dairy production (VNM).

As tens of billions of dollar have ‘evaporated’ just over the last two months, listed companies are planning to spend trillions of dong to buy treasury stocks. The move is hoped to stop the slide of share prices and help enterprises protect themselves from being swallowed.

Analysts say it is difficult to predict what will come the next. This could be why foreign investors are leaving Vietnam to return to traditional markets.

In Vietnam, the P/E is now at 11-12, but Vietnam’s stocks are no longer very attractive to foreign investors as they have been selling more than buying for 30 consecutive trading sessions on the HCM City bourse, with net sales totaling VND8.5 trillion. ETFs have caused a net sale increase over the last month.

The movement of withdrawing capital from emerging markets began earlier this year, when the US peaked and large investment funds chose the US as the major investment markets.

However, the events of Covid-19 have changed all economic forecasts. Therefore, staying away from the stock markets in developing markets is optimal in the short term, according to KBSV.

Vietnam’s stock market turns 20 years old in 2020. There are 750 caps and fund certificates listed at the HCM City Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX).

Kim Chi