UPDATE 1-Vietnam dong falls to 3-mth lows, tumbles offshore

"The stock market is going downhill and indirect investors are withdrawing funds from government bonds," Ha, head of Vietnam's second-largest lender by assets, said in a statement.

Vietnam's stock exchange .VNI, which expanded 23 percent last year amid investor excitement about Vietnam's economic potential, has since slumped 55 percent to be the worst performer in Asia so far this year.

On May 2, Standard & Poor's cut its outlook on Vietnam's sovereign rating to negative from stable, blaming macroeconomic risks and dealing a blow to a country dependent on foreign capital inflows [ID:nT197201]. (Reporting by Hanoi Newsroom; Editing by Grant McCool and Jacqueline Wong)