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Expert: Brexit to affect Vietnam
Tran Thu
Monday,  Jun 27, 2016,21:41 (GMT+7)

Expert: Brexit to affect Vietnam

Tran Thu

HCMC – Britain’s vote to leave the European Union (EU) will certainly affect Vietnam’s economy, Phan Dung Khanh, head of investment analysis and consultancy at Maybank Kim Eng Securities Company, told the Daily.

The “Leave” win in the UK’s referendum on EU membership will leave impact on the local stock market in the long term as the UK will need time to negotiate with 27 other EU states and conduct procedures to divorce from the EU. In addition, it is unclear whether any other EU countries will follow in Britain’s footsteps.

Khanh said Britain’s exit will affect domestic businesses. The British pound and the euro have depreciated while the U.S. dollar and the Japanese yen have strengthened against other currencies. Therefore, enterprises borrowing the pound and the euro will benefit and those taking out loans in the dollar and the yen will hurt.

Khanh added that in the medium and long terms, gold might edge up on the domestic market in tandem with world developments. However, gold price hike in Vietnam might be lower than the world’s.

Asked by the Daily if Brexit will impact the free trade agreement between Vietnam and the EU, an expert from the EU Delegation to Vietnam said it is too soon to speculate.

In reality, two other EU nations look set to vote to withdraw from the EU. This indicates that Brexit might lead other EU countries to pull out of the EU, instead of complying with the general rules of the bloc.

Khanh said both the dollar and gold have risen sharply on world markets, which is against normal developments. This is an indication that Brexit is exposing the global economy to big risks.

Last Friday saw Vietnam’s equity and gold markets as well as the exchange rate between the Vietnam dong and the U.S. dollar turning strongly volatile after Britain’s decision to leave the EU. 

The VN-Index of the HCMC exchange plunged a hefty 11.5 points (1.82%) at 620.77 with 206 losers and 51 gainers.

Dan Tri newspaper cited data of the HCMC bourse as showing that its market capitalization stood at VND1,247.31 trillion at the close, down over VND22.6 trillion against last Thursday. 

On the Hanoi bourse, the HNX-Index ended down 2% at 83.62 points with 178 laggards and 48 gainers. Its market capitalization contracted more than by VND2.8 trillion to VND152.88 trillion.

Overall, Vietnam’s equity market saw its market capitalization losing over VND25.4 trillion last Friday.

Notably, trading volume and value on the southern bourse were the highest since March 2014, with 270 million shares worth VND4.81 trillion changing hands. Liquidity also improved significantly on the Hanoi market as investors traded 110.6 million shares valued at VND1.32 trillion, the highest since September 2014.

Saigon Jewelry Company (SJC) bought a tael of gold at VND34.65 million and sold it at VND35.15 million at 2:30 p.m. last Friday, up VND850,000 and over VND1 million per tael compared to the previous day.

At the end of last Friday’s trade, SJC’s buying and selling prices fell to VND33.95 million and VND34.25 million a tael. 

Meanwhile, one dollar was bought at VND22,300 and sold at VND22,370 at Vietcombank last Friday afternoon. The dollar buying and selling prices stood at VND22,290 and VND22,375 at VietinBank while Techcombank quoted the buying price at VND22,270 and selling price at VND22,370.  

At the end of the day, Vietcombank’s dollar buying and selling prices were VND22,295 and VND22,365 and those of VietinBank were VND22,260 and VND22,370. The prices quoted by Techcombank remained unchanged.

 

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