Vietnam’s fledgling stock market will not be influenced by the falls of world stock markets as Vietnam remains a very small market which does not have close links with world markets, experts say.
Just two days before last weekend, big banks in Europe, US and Asia deiced to pump more capital into the world’s banking system, totalling $326bil, in order to prevent the collapse of the global market. The move could help prevent a financial storm, but it could not help stop the decreases of stock prices in world markets on August 10.
In New York, the Dow Jones was down by more than 200 points in the morning trading session, and further decreased by 30.32 points in the afternoon, closing at 13,240.36 points.
The Nasdaq decreased by 11.6 points (0.45%) to 2,544.89 points, while FTSE 100 of London Stock Exchange witnessed its most lackluster day in four years on August 10 when it fell by 3.7%.
The global market began staggering after France's biggest listed bank, BNP Paribas, announced it would freeze three funds due to subprime problems. The European Central Bank (ECB) immediately decided to lend a huge sum of money worth Euro95bil to banks in order to mitigate the impacts of the decision, and the sum of Euro62bil for lending was announced the next day, August 10. The US Federal Reserve, the central banks of Canada, Australia and Japan all have decided to pump billions of dollars into their domestic banking systems. The central banks of Malaysia, Indonesia and other Asian banks are also taking actions in order to stabilise their markets.
A question has been raised about whether or not the world’s crisis will hurt Vietnam’s stock market. An official from the HCM City Stock Exchange (HOSE) said that Vietnam’s market would not be affected because it remained very small and did not have close links with world markets. Vietnam does not have big companies which list on American, European stock markets; therefore they do not bear bad influences from the outside.
The official also said that it was not likely that foreign financial institutions would withdraw their capital from Vietnam. The investment capital flowing into Vietnam’s stock market has been increasing sharply in the last time, but it is worth several billion dollars only. Of this amount, big financial institutions just have injected several hundred million dollars, a very small sum compared to their huge investment deals elsewhere.
Therefore, though suffering losses in other big markets, institutions will not need to withdraw capital from Vietnam to make payment deals in other markets.
Dr Nguyen Ngoc Nhung, senior expert in banking and finance, also said that there were no signs that world market falls would affect Vietnam’s stock market and banking system. Only if the falls severely hurt world economies would Vietnam’s national economy suffer as a result.
Source: VNE
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i think quite a few vietnam's exchange trade funds are traded in Japan and the UK. In other words, if the trade volume is low in vietnam, the vietnam index movement will be subject to influence of the global market.
The only stock market that is insulated from external shocks is the Shanghai A-share market. It has limited connection to the global market, but the trade volume in the domestic market is huge.
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