Derivatives market records surge in transaction value

The value of transactions in the derivatives market increased three times from the average of over VND2 trillion (US$87.7 million) in the beginning of April to VND6 trillion at the end of the month.- Photo tapchitaichinh.vn

An SSI financial and monetary report this week showed that since the beginning of 2018, the stock market experienced two downward periods in February and April when the liquidity of derivatives grew strongly.

The value of transactions in the derivatives market increased three times from the average of over VND2 trillion (US$87.7 million) in the beginning of April to VND6 trillion at the end of the month. It peaked at VND7.1 trillion on May 3, approximating the total transaction value of VND7.3 trillion in the stock market.

The derivatives market attracted a considerable amount of capital from the stock market, mainly from domestic investors.

SSI said Viet Nam’s securities market witnessed a series of widespread nosedives when the number of codes with declines doubled those with increases. All groups of key shares fell sharply, causing a psychological pressure on the overall market.

The benchmark VN Index surged in the first quarter of 2018 to set a record of 1,204.33 points on April 9, up by 220 points or 22.4 per cent from the end of last year and 49 per cent in six months.

However, the market reported continuous plunge since then when the VN Index dropped to 1,050.26 points in late April, losing 154 points or 12.8 per cent of the new record. The total market capitalisation in HCM Stock Exchange, Ha Noi Stock Exchange and the Unlisted Public Company Market decreased by $20 billion to combined $173 billion.

Foreign investors were net buyers last month, which was attributable to a tumble in the global stock market in February, changes in global interest rates when the administration of US President Donald Trump took drastic actions to protect US businesses, possibility of an interest rate hike by FED sooner than expected and risk of a widespread trade war.

That more large-cap stocks carried out initial public offerings and were listed in the market might have also led to foreign funds’ restructuring of their investment items, according to SSI.