Hana: "Vietnamese Stock Market Plunge Brings Short-Term Volatility... Opportunity to Increase Holdings"

Hana Securities stated on October 23 that, following the recent announcement of the corporate bond audit results, which led to a sharp decline of over 5% in Vietnam's VN Index, continued market volatility and an inevitable short-term correction phase are expected. However, the company analyzed that the medium- to long-term outlook remains positive, suggesting that this could be an opportunity to increase holdings through staggered purchases.

Kim Geuna, a researcher at Hana Securities, stated in the report "Emerging Market Strategy: Background and Outlook of the Sharp Decline in the Vietnamese Stock Market" released on the same day, "The Vietnamese stock market is likely to experience continued caution and volatility for the time being."

Regarding the more than 5% plunge in the VN Index on October 20, Kim explained, "Amid growing market anxiety due to issues such as the diversion of funds and non-payment of convertible bond interest by Novaland, a major real estate developer, the direct trigger was the announcement by the government audit office of the results of a comprehensive review of corporate bonds issued between 2015 and 2023, totaling 462 trillion dong (about 17.5 billion dollars)."

News that widespread violations-including insufficient information disclosure and delays in principal and interest payments-were confirmed at as many as 67 issuing institutions (5 banks and 62 companies) spread concerns across the real estate and financial sectors. Kim explained that, as a result, fears of delayed or reduced fundraising due to strengthened supervision rapidly heightened risk aversion sentiment.

Additionally, Kim pointed out that the rapid rise in the VN Index had led to accumulated valuation pressures, resulting in a large volume of profit-taking, and that the margin balances of individual investors had reached record-high levels, both of which contributed to the sharp decline.

Accordingly, Kim assessed that a short-term correction phase is inevitable, but the medium- to long-term outlook remains positive. He noted, "This audit serves more as a warning than as an enforcement action, as it does not include sanctions," and added, "The banks and companies involved have also promptly provided explanations to ease concerns, so the likelihood of structural problems spreading is limited." The VN Index, after its sharp drop, has shown signs of recovery with two consecutive days of gains.

Kim also mentioned that the Vietnamese government has set ambitious growth targets of 8% for this year and 10% for next year, and analyzed, "After the correction phase, the Vietnamese stock market is likely to continue a gradual recovery, supported by solid fundamentals and policy momentum." He added that the audit could also contribute to restoring market trust and reducing risk premiums by enhancing transparency over the medium to long term. He further stated, "Expectations for an upgrade to FTSE Emerging Markets status remain valid," and projected, "If inclusion is confirmed in the interim review scheduled for March 2026, with formal inclusion in September, a valuation rerating driven by global capital inflows will be possible."

Kim concluded, "This sharp decline should be interpreted as a temporary correction and an opportunity to increase medium- to long-term holdings," and advised, "However, since short-term volatility is likely to persist, it is advisable to respond with staggered purchases."