Global and Vietnamese stocks dropped low by global COVID-19 fears

The VN-Index dropped 3.19 per cent to 903.34 points. Market breadth was negative with seven losers against each gainer, implying pessimistic sentiment.

Meanwhile, the HNX-Index declined by 3.62 per cent to 104.18 points.

Global and Vietnamese stocks have been swung about by news of COVID-19 spreading

Bank stocks were hit particularly hard. Shares of Vietnam Prosperity Bank (VPB) and Techcombank (TCB) all closed 6.9 per cent lower in the context that commercial banks in Vietnam would cut or delay interest payments on loans, following a directive from the State Bank of Vietnam. State-owned lenders, such as VietinBank, Vietcombank, and BIDV also fell by 5.6, 2.0, and 6.5 per cent, respectively.

On the other hand, cautious investors preferred healthcare-related stocks, with Hau Giang Pharmaceutical JSC (DHG), Ha Tay Pharmaceutical JSC (DHT), and Imexpharm Corporation (IMP) gaining 1.2, 1.3, and 0.2 per cent. Particularly, the shares of Phuoc Hoa Rubber JSC (PHR) rose 1.7 per cent to VND48,000 ($2.1) per share thanks to its land acquisition for the Nam Tan Uyen 3 project.

Besides, a few tickers of the VN30-Index fell by more than 4 per cent such as Bao Viet Holdings (4.27 per cent), FPT (4.0 per cent), Vietnam National Petroleum Group (4.17 per cent), PetroVietnam Power Corporation (6.9 per cent), and SSI Securities Corporation (6.88 per cent).

Last week, South Korea raised red alert over the infectious disease – the highest level since 2009

Last week, a group of 20 major economies cautioned that the viral outbreak poses a serious risk to the global economy as new cases flared outside of China, prompting concerns about dangerous new pockets of infection in places as far as Iran, Italy, and Korea.

In South Korea, which reported its seventh death from the COVID-19, the benchmark Korea Composite Stock Price Index, or Kospi, closed down 3.9 per cent. That was its biggest one-day fall since 2018, according to FactSet. South Korea on Sunday raised its infectious-disease alert to red – the highest level – for the first time since the H1N1 swine flu outbreak in 2009.

In Italy, more than 50,000 people were not allowed to leave their towns under a quarantine in effect since Sunday. The outbreak’s epicenter within the country is just miles from Milan, the engine of Italy’s economy, and led to trade shows, football matches, and other public events being cancelled, according to Wall Street Journal.

Researchers at Bao Viet Securities stated that the COVID-19 contagion in South Korea would have a negative impact on Vietnam’s economy. The outbreak in South Korea can cause a sharp decrease in the number of tourists from this country to Vietnam. According to 2019 statistics, tourists from China and South Korea accounted for 56 per cent of total visitors to Vietnam.

With a sharp decline in the number of tourists from China due to the epidemic, the significant drop of visitors from South Korea will be a double hit on Vietnam's tourism as they accounted for nearly 30 per cent of foreigners coming to Vietnam last year.

Investors with high cash proportion should stay outside the market and await signals of a rebound for the indices.