Vietnam stocks slump after state media report on alleged bond irregularities

Vietnam’s main stock index fell to its lowest closing level in a month on Monday (Oct 20) after state media reported the results of a government agency’s investigation into alleged irregularities in the use of corporate bond proceeds.

The index closed 5.47 per cent lower at 1,636.43, marking the second-biggest percentage fall this year, after a 6.43 per cent drop on Apr 8. The drop of 94.76 points in the index was a record daily points fall, Vietnamese state media reported.

Four stock brokers in Hanoi said it was not clear why the market fell so sharply, although one investor cited state media reports about 70 banks and firms allegedly diverting funds for purposes not disclosed in their official bond issuance plans.

Falls were led by stockbroker SSI Securities, which dropped 6.99 per cent, steelmaker Hoa Phat, which fell 6.96 per cent, Saigon Thuong Tin Bank, which ended down 6.95 per cent and real estate firm No Va Land, which closed 6.93 per cent lower.

More than 1.7 billion shares valued at 53 trillion dong (S$2.6 billion) were traded on the Ho Chi Minh City Stock Exchange during the session.

“I’m so surprised,” said one broker, adding: “It looks like investors have sold in panic, but we are not clear what was the main reason behind the fall.”

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Earlier on Monday, Prime Minister Pham Minh Chinh said the government would target record economic growth of at least 10 per cent next year.

The market hit a record high earlier in October after index provider FTSE Russell said its market could be upgraded to secondary emerging status next year.