Vietnam Financial Market Reels on Brexit Bombshell

Tuan Minh

12:20 25/06/2016

BizLIVE - Vietnam’s financial sector was rattled on the “Black Friday” after Britons voted to leave the European Union.

Vietnam Financial Market Reels on Brexit Bombshell

The Brexit rocked Vietnam's financial market on June 24. (Photo: Internet)

Vietnam was not immune from the impact of the Brexit bombshell on June 24 when its stock, gold, money markets swung widely.
All the indexes of the Hochiminh and Hanoi stock exchanges headed south when shares entered a correction territory amid global selloffs on concerns of bad economic consequences of the Brexit.
The benchmark VN Index of the Hochiminh Stock Exchange lost 11.5 points to end 1.82% lower at 620.77 and the market capitalization of the bourse dwindled 22.62 trillion dong ($1 billion). During the trading session, the gauge plunged 5.4% to the intraday low of 597.91.
As a safe haven, prices of SJC-brand gold in Vietnam broke the 35 million dong ($1,555)/tael threshold, which had been in place for months.
Prices of SJC gold bar quoted by Saigon Jewelry (SJC) stood at 34.65 million dong ($1,540)/tael for bid and 35.15 million dong ($1,562)/tael for ask on Saturday morning, around $50/tael higher than the open on June 23.
Meanwhile, the U.S. dollar strengthened against the dong, with the USD/VND rate weakening by 30-35 dong from a day earlier to 22,300-22,370 for buying and selling, respectively, at Vietcombank. However, the exchange rate stabilized later in the afternoon.
Phan Dung Khanh, director of investment consultancy at Ho Chi Minh City-based Maybank Kim Eng Securities, told Saigon Times Online that prices of the greenback and gold were heading north parallel instead of moving in opposition directions usually.
The adverse impact of the Brexit on Vietnam’s stock market may endure as negotiations between the UK and the European Union will take a long time.
Mr. Khanh added that domestic gold prices would likely go up in the middle and long terms, following the global trend, but at a slower pace as the existing policies discourage gold holders.
A State Bank of Vietnam official was quoted by as saying that the central bank was closely monitoring market movements to take prompt regulatory actions.
Markets are closed on Saturday and Sunday, which gives a breath to the financial market and helps calm nerves.