Trump Presidency swings VN Index out of balance

November 09, 2016 | 17:00

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The Vietnamese financial market experienced strong volatility after the election of Donald Trump as the 45th President of the United States. At its worst, the VN Index benchmark plummeted nearly 20 points to just 655 points.

On the trading day of November 9 the VN Index closed at 670.26 points, shedding 6.2 points (-0.92 per cent) from the day before. Of the member indices, 189 tickers lost and 61 improved.

The HNX Index fell by 1.15 points (-1.41 per cent) to 80.11 points, with 117 codes losing and 48 codes improving.

The UpCom Index fell 0.38 points, or 0.63 per cent, to end at 58.91 points, a considerable recovery from the steep losses of midday. 46 stocks increased in value, 49 tumbled, and 17 remained unchanged.

The market volume totalled 4.1 million shares valued at VND93 billion ($4.13 million)—a significant increase compared to the 6.7 million shares and VND120 billion ($5.45 million) from the previous trading day.

The free-float adjusted VN30-Index, a market cap-weighted index of 30 stocks with the highest market value and liquidity on the exchange market, dipped 6.59 points, or 1.03 per cent, to end at 635.42. Notably, 25 stocks lost, while only 3 stocks advanced, including BID, CII, and MWG.

Foreign investors were net buyers of more than VND136 billion ($6.2 million) on both exchanges (Ho Chi Minh Stock Exchange and Hanoi Stock Exchange).

According to analysts, Trump’s policies are more unpredictable than Clinton’s. In particular commerce, tax, foreign trade, healthcare, and immigration are all poised to see a number of changes from the Obama administration, with unpredictable impacts.

Bao Viet Securities Company (BVSC) assessed that Trump’s presidency diminishes the chances of signing the TPP due to the new president’s earlier outbursts against free trade agreements.

The North American Free Trade Agreement (NAFTA) will likely be renegotiated, while tax barriers for imports from other countries may be established. Commercial retaliation may become an active tool of US foreign policy, especially if if China and other nations raise tariffs for products imported from the US.

“If Trump carries out the policies he declared in the election, the US will experience enormous changes and the unpredictability of these policies will put an unfavourable upward pressure on the price of risky assets, such as securities, the USD, oil, etc. However, positively, the chance of a FED rate hike in December will be considerably reduced in this eventuality,” said the BVSC report.