VietNamNet Bridge - Experts believe that the most important factor that may have a negative impact on the stock market is the exchange rate fluctuation.

The most important factor that may have a negative impact on the stock market is the exchange rate fluctuation.

After the crude oil price in the world market dropped to $40 per barrel following OPEC’s meeting in early December, securities investors have predicted a gloomy future for oil & gas shares, including GAS of the Gas Corporation.

To date, GAS remains among the shares with the highest capitalization value in the market which has influences on the VN Index. With the closing price at VND40,300 per share on December 4, its capitalization value has dropped to $3.39 billion, just equal to 1/3 of that in July 2014, when the GAS market price climbed to VND120,000 per share.

The shares of the companies in the energy sector are believed to top the list of factors which have negative impact on the stock market in 2016.

By December 4, the VN Index has increased by 8.5 percent, but the dong was devalued by 5 percent.

Another factor is the predicted bad performance of maritime transport. The ship chartering and freight business has been decreasing, while analysts think the BDI (Baltic Dry Index) may break the 500 point threshold in the near future. 

In such circumstances, investors have every reason to think the IPO (initial public offering) to be made by Vinalines would not go smoothly.

Unlike other business fields, where the sales will go up when the prices go down, in the stock market, investors will go away when the prices fall. Meanwhile, the prices of shipping firms have dropped dramatically to just several thousand dong per share and shipping firms all have reported losses.

The third factor is that the tough days of farm and seafood produce companies still are not over with big problems in rubber, catfish and shrimp exports due to the devaluation of hard foreign currencies against the US dollar and due to the anti-dumping tax.

Hoang Anh Gia Lai, a powerful conglomerate in Vietnam, has seen its share price at the lowest level since it began listing on the bourse. Foreign investors now rush to sell Hoang Anh Gia Lai shares because the prices of rubber, one of the main business fields of Hoang Anh Gia Lai, have dropped dramatically.

Meanwhile, the shares of Hung Vuong and Minh Phu Seafood Companies also face the investors’ indifference due to higher inventory levels and high costs for bank loans.

Analysts pointed out that the exchange rate fluctuation would also have big impact on the stock market. The dong/dollar exchange rate adjustments, if they are made, would force foreign investors to reconsider their investment plan. 

By December 4, the VN Index has increased by 8.5 percent, but the dong was devalued by 5 percent.


TBKTSG