The Ho Chi Minh City Stock Exchanges VN Index slumped 3% to 434.42 at the 11 a.m. local-time close, extending its decline from this years high on May 6 to more than 20%, which analysts define as a bear market.
Vietnams stock index tumbled more than 20% from its high in May, entering a so-called bear market on concern the government may impose more measures to plug the nations deficit after devaluing the dong last week.
The State Bank of Vietnam lowered the reference rate for the local currency by 2% on Aug. 18, devaluing it for a third time since November to help reduce the widening trade deficit. The gap reached $7.4 billion for the seven months through July, almost twice the figure for the same period in 2009, increasing pressure on the exchange rate.
"Monetary policy isnt likely to be loosened till the end of the year," said Nguyen Duc Hai, head of research at Hanoi- based Vietcombank Securities. "The market is still falling and theres no sign of a bottom."
Vietnam Joint-Stock Commercial Bank for Industry & Trade, the countrys second-biggest listed lender by market value, dropped 4% to 21,600 dong, a record low. Vietnam Export- Import Commercial Joint-Stock Bank, known as Eximbank, lost 1.2% to 16,100 dong, also a new low. Vincom Joint-Stock Co., the nations biggest listed property developer, sank 4.6% to 62,500 dong, the lowest since June 9.
Inflation slowed for a fifth month in August, which may ease concern the devaluation of the dong will stoke price pressures. Consumer prices climbed 8.18% this month from a year ago, according to figures released yesterday by the General Statistics Office in Hanoi, down from 8.19% in July. Prices increased 0.23% from last month.
Source: fpts.com.vn