Vietnam index plummets about 6 pct on South China sea dispute

Thu May 8, 2014 4:55am EDT

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HANOI, May 8 (Reuters) - Vietnamese stocks tumbled on
Thursday, posting their biggest single-day drop in nearly 13
years as tension mounted between China and Vietnam in the South
China Sea, market experts said.
    Vietnam's benchmark VN Index ended 5.87 percent down,
paring some of its previous losses that pulled the index down to
the biggest decline since October 2001, Reuters data showed.
    The northern bourse of Hanoi also fell 6.4 percent
to 71.66, witnessing the biggest fall since May 2010.
    Vietnam said on Wednesday that Chinese vessels intentionally
rammed into its ships in a disputed area of the South China Sea,
where Beijing has deployed a giant oil rig, sending tensions
spiralling in the region. 
    The market witnessed heavy selling pressure, mostly from
retail investors who abandoned shares over rising tension
between the two communist countries as well as margin calls
resulted from such sharp drop, market experts said. 
    But foreign investors and funds are seen picking up shares,
as prices have fallen to attractive levels.
    "The market is now cheap again ... For anybody who was
nervous about chasing the rally earlier this year could have a
better opportunity to have a look at it at a lower level," said
Kevin Snowball, chief executive of PXP Vietnam Asset Management
fund.
    "I don't think this (the sea conflict) is going to lead to a
war; therefore, it is likely to create a buying opportunity,"
Snowball added.    
    Chinese Vice Foreign Minister said on Thursday that China
and Vietnam could resolve disputes at sea peacefully and that an
incident between the countries earlier this week in a part of
the disputed South China Sea was not a "clash". 
    The State Securities Commission of Vietnam on Thursday
released a statement on its website telling investors not to
worry as macroeconomic indicators and corporate results have
been positive.
    "Falls in the market this morning could have been a reflect
of sentiment over news from the East Sea (South China Sea). We
suggest investors to stay calm and careful ...," it said in the
statement.
    "Some large funds are actively buying stocks," the
commission added.
    Trading volume on the Ho Chi Minh Stock Exchange hit a
three-week high at 147 million, with more than 85 percent of
stocks losing ground on Thursday, Reuters data showed.
    Vietnam's biggest firm by capitalisation PetroVietNam Gas
 tumbled 6.6 percent, and dairy product maker Vinamilk
 lost 6.72 percent.
    Here is a snapshot of the VN Index at the close (0801
GMT).
                VN Index      527.09           
             PREV. CLOSE      559.97           
                % CHANGE      -5.87%           
                                               
                    HIGH      550.75           
                     LOW      525.37           
                                               
       Change (%) 1-mnth       -6.76           
       Change (%) 3-mnth       1.857           
       Change (%) 1-year       15.32           
                                               
            52-week high      609.46  25-Mar-14
            52-week low       462.13  30-Aug-13
 
 (Reporting by Mai Nguyen)
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