Vietnam’s central bank devalued the official VND exchange rate for the 2nd time in the past 3 months

From: Goldman Sachs Global Economics

Vietnam Stock Market

From: Viet-Studies

" Modelling the impact of oil prices on Vietnam’s stock prices"

(Applied Energy January 2010)

By: Paresh Kumar Narayan and Seema Narayan

Elsevier: Applied Energy

Abstract:

"The goal of this paper is to model the impact of oil prices on Vietnam’s stock prices. We use daily data for the period 2000–2008 and include the nominal exchange rate as an additional determinant of stock prices. We find that stock prices, oil prices and nominal exchange rates are cointegrated, and oil prices have a positive and statistically significant impact on stock prices. This result is inconsistent with theoretical expectations. The growth of the Vietnamese stock market was accompanied by rising oil prices.

However, the boom of the stock market was marked by increasing foreign portfolio investment inflows which are estimated to have doubled from US$0.9 billion in 2005 to US$1.9 billion in 2006. There was also a change in preferences from holding foreign currencies and domestic bank deposits to stocks local market participants, and there was a rise in leveraged investment in stock as well as investments on behalf of relatives living abroad. It seems that the impact of these internal and domestic factors were more dominant than the oil price rise on the Vietnamese stock market."

Vietnam's market - beat expectations

Charts from Emerginvest.com




Reasons - For:

• Net purchase of foreign investors (Stockbiz: Tiền ngoại đổ vào chứng khoán )
  
• Inflation easing (VnEconomy: CPI tháng 5 tăng 0,44%)
• Banks' profit (VnEconomy: 4 tháng, Sacombank lãi gần 491 tỷ đồng)

Alerts - Against:

• Gold price at record high (VnEconomy: 2,074 triệu đồng/chỉ)
  
• Interest rates pressure (StockBiz, CafeF: Lãi suất bình quân qua đêm 5,61%/năm)
• Standard & Poor’s rates Vietnam below ‘investment’ grade (Thanhnien)