Vietnam’s stocks slid the most in more than three months to enter correction territory amid concern the nation’s exports will be hurt by yuan devaluation.
The VN-Index slumped for a fifth day, losing 2.7 percent to 573.15 at the 3 p.m. close and extending losses to 10 percent since this year’s peak on July 13. PetroVietnam Gas JSC fell 6.1 percent to its lowest level since March 2013. Vietnam Joint Stock Commercial Bank for Industry & Trade, or VietinBank, tumbled the most in almost two years.
Seeking to safeguard export growth that slowed to 9.5 percent in the first seven months from 14 percent a year earlier, Vietnam’s central bank may have to devalue the dong again after busting through its goal of limiting depreciation to 2 percent in 2015 as the yuan weakened.
A weaker currency isn’t good for bank and consumer stocks, according to VinaSecurities JSC.
“There is no good news coming to the markets, just bad news,” said Attila Vajda, managing director at Project Asia Research, a Singapore-based advisory firm. “Investors are also concerned about the profitability of some banks, such as Vietnam Export-Import Bank.”
The nation’s stock gauge trades at 12-month projected earnings of 11.9 times, compared with this year’s peak valuation of 13.4 times. The MSCI South East Asia index is valued at a multiple of 13.1 times.