The risks faced by Vietnam's current financial system are once again reflected in the stock market.
On Thursday, the flagship index, the most popular flagship index in the Vietnam stock market, the Ho Chi Minh City Exchange VN30 index, opened low and closed low, down sharply, falling sharply, once fell by more than 5.5% during the session, and finally closed down 4.38%.
Looking back on the situation before September this year, the Vietnamese financial market is far from the current situation.
Although since this year, with the continued explosion of global inflation, major central banks and central banks have been forced to embark on the road of tightening, and many emerging markets have been forced to become "hard-hit areas", Vietnam has the honor to escape from the storm circle.
not only has the stock market been upward, but Vietnamese Dong also won the most stable currency in Asia. Coupled with its strong economic performance, Vietnam's outlook seems to be very good.
However, after September, the situation took a sharp turn, and Vietnam suffered a series of major shocks one after another, turning the once beautiful vision into a mirror.
Not only did the stock market fall into a downturn, but the once strong VN30 index has fallen nearly 25% since September.
, which once led the Asian currency, also lagged behind quickly, with a decline in the exchange rate against the US dollar approaching 6%, and is currently operating at an all-time low.
When the financial system is in a storm, the important real estate market has also suffered a double critical hit. Several Vietnamese real estate tycoons were imprisoned, resulting in a bank run in Vietnam's fifth largest bank and storming the stock market with their own strength.
In addition, Sirui studied Hong Hao compared the market trends of China and Vietnam in the past five years and found that once it was adjusted according to the leading characteristics of the Chinese market, the similar trends of the two markets were clear at a glance, and the Chinese market led the Vietnamese market for three months. Learning from history, Vietnam's stock market is likely to fall further.
What exactly happened in Vietnam in just a few months?
rate hikes twice in one month cumulatively up to 200 basis points
Fed hikes five consecutive rates, it is difficult for Vietnam to remain calm.
On September 22, the Vietnamese central bank will refinancing interest rate and deposit interest rates 100 basis points to 5% and 3.5% respectively.
On October 24, the Vietnamese central bank once again announced that it would raise the refinancing rate from 5% to 6%, and the discount rate from 3.5% to 4.5%, the second major move in a month.
In addition, the commercial bank's Vietnamese Dong deposit interest rate cap will be increased by 50 to 100 basis points based on the maturity period.
In a statement, the central bank of Vietnam said that global inflation remains high. The Federal Reserve has raised interest rates five times recently and is expected to raise interest rates this year and 2023. This combined with the strengthening of the US dollar, putting pressure on Vietnam's interest rates and exchange rate . The Vietnamese central bank said it was closely monitoring its own and overseas markets, and timely managed and used monetary tools. These include currency intervention and forex market to meet the liquidity needs of financial institutions.
Market participants believe that Vietnam's interest rate hike is intended to prevent further consumption of the country's foreign exchange reserves .
Vietnam discloses its foreign exchange reserves from time to time, which has steadily risen over the past decade, reaching US$100 billion by the end of last year. Due to the depreciation of the Vietnamese dong this year, the Vietnamese central bank was forced to sell US dollars to the market to support its own currency. has estimated that the Vietnamese central bank has sold about US$20 billion of foreign exchange reserves this year.
Real estate tycoon was arrested and bank runs were "double critical hit"
In the first half of 2022, the housing price increase of Ho Chi Minh, the largest city in Vietnam and the capital Hanoi squeezed into the top ten in Asia, among which Ho Chi Minh City increased by more than 20% in the first half of the year, with an average price exceeding RMB 35,000.
There are also media reports that in April 2022, Ho Chi Minh City's housing prices had reached a historical high in ten years, and was almost out of control.
The surge in the real estate market has also opened up a regulatory storm in Vietnam, continuing to strengthen supervision of real estate companies' bond sales, and strengthening loan review for real estate projects.
In this context, several Vietnamese real estate tycoons, including Zhang Meilan, were sent to jail. Among them, the police said that Zhang Meilan's related companies were suspected of illegally issuing bonds and raised trillions of Vietnamese dong. This news directly led to a bank run in Saigon Commercial Bank, the fifth largest bank in Vietnam, and directly collapsed the stock market.
Zhang Meilan's arrest highlighted the risks of Vietnam's real estate, and also exposed the fragility of the financial industry in this Southeast Asian country. The bank's bad debt rate rebounded and the capital adequacy ratio of began to decline.
Financial regulatory storm continues. The Vietnamese Prime Minister vowed to crack down on financial violations
Since the end of March this year, the Vietnamese government has set off the most powerful financial regulatory storm in history. Fan Mingzheng ordered the authorities to crack down on violations in stocks, bonds and real estate markets, and launched a series of investigations. Vietnamese police subsequently arrested several securities companies and listed companies suspected of manipulating the market. At that time, the investigation also had a serious impact on the Vietnamese stock market in the short term.
Then in November this year, Vietnamese Prime Minister Fan Mingzheng made it clear that the Vietnamese government will severely punish those who violate financial regulations and protect investors in order to ensure and maintain the "healthy" development of the Vietnamese market. In terms of monetary policy, Fan Mingzheng said that the government will always insist on giving priority to stabilizing the macroeconomics, curbing inflation and promoting economic growth; continue to pursue a prudent and flexible monetary policy, effectively coordinate with fiscal policy, and "avoid sharp turns in the policy."
With the sharp appreciation of the US dollar and the weakening of the global economy of , the situation facing Vietnam's economy has become slightly more difficult than the rapid growth period after the epidemic.
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