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What is Margin trading? It refers to the process where traders buy and sell stocks in a single session. This happens after traders speculate on stocks price movement during the session. It helps them to make quick gains even when the world stock markets are troubled.
In Vietnam, things are not better. Stock traders are using all means to earn a living on the stock market at this time it has hit its lowest levels in 9 months. Of course there are reasons why this is the case. The tightening of the monetary policy in the United States, the arrest of local executives and the Covid lockdown in China are some of the reasons impacting Vietnam stocks. Read on to see the reasons why Vietnam stocks are plummeting.
Arrest of Executives
The recent crackdown and arrest made on executives of some of the quoted companies in Vietnam has fuelled speculations that have led to a slump in the stock share prices. The authorities are accusing the officials of trying to manipulate the stock markets and involving themselves in graft activities. As a result, the stock market index has lost 13.8 % this month.
Impact of US Monetary Policy
Like many other world markets, the Vietnam stock market is dipping following the tightening of the United States’ monetary policy. Notice that in the past few years, there has been an increased relationship between the US and Vietnam in terms of trade and investment. So any action that affects the amount of money in the hands of American traders directly impacts Vietnam’s stocks.
The US central bank has already raised interest rates to try to pull down inflation. The move has reduced the amount of money in the hands of traders who do business in Vietnam. The action has directly impacted the demand for stocks and made the prices dip even further.
Impact of Russian Ukraine War
The impact of the Russia- Ukraine conflict is heavily weighing down the Vietnam market. Already, the economic sanctions imposed on Russia have reduced the volume of crude oil on the market-leading to supply worries that have impacted on commodity prices in many countries, including Vietnam. Also, the high petrol prices are eating into the trader’s disposable income, reducing the amount of money available for the stock market.
Covid 19 Lockdowns
China is experiencing a rise in Covid 19 infections. The situation has forced the authority to institute several containment measures, including lockdown in some of her cities and provinces like Guangzhou. Also, cities like Beijing have embarked on mass testing, while Shanghai has instituted lockdown measures that have greatly reduced the movement of people. Concerns that China is likely to impose further lockdown in more cities have exacerbated the already delicate situation. This has hit the Vietnam stock market severely. In addition, the measures are likely to affect the supply of coal, oil and even metals and other essential raw materials.
Elsewhere Beijing has locked parts of the Chaoyang district as the virus spreads. This has triggered panic, and the prospect that the city is likely to be put under full lockdown is making stock market investors in the neighboring Vietnam nervous. Also, there are speculations that China is likely to resort to a zero Covid strategy by instituting further lockdown. This will further disrupt the supply chains in the coming months and further dip the world’s stock market.
Final Thoughts
Thus, just like many other world markets, the Vietnam stock market is falling in response to the United States’ effort to contain inflation and Covid 19 containment measures in China. Also, the market is expected to dip further as it responds to the arrest of local Vietnamese executives.
