Well I could just say because the US stock market was down quite a bit since Friday (today is Vietnam’s first trading session since then) and finish this blog post with one sentence. However I thought it might be interesting to explore some of the recent correlations between the Vietnam stock market, and that of the US.

We have seen some price action in most of April that was different compared to what occurred when US stocks were falling in January…


At the time of writing this not long after the market opened, the Vietnam stock market today began the session showing losses of circa 1% when I last checked. Note that due to public holidays, today is the first time the Vietnam market has traded since the US market suffered large losses on Friday.

I want to put some context into this firstly in terms of what we saw for the most part of April. There looked to be plenty of panic selling in Vietnam stocks recently back on Monday April 25th. There were broad based losses that day and the VN-Index was down 6% not long after the open. At that point it meant the VN-Index was down around 13% just for April month to date alone, whereas over the same period the S&P500 had only fallen around 5%.

Vietnam stocks did however perform well after those lows, adding more than 5% over the last 4 days of April.

The substantial underperformance over the first 3 weeks or so in April was in contrast to how the Vietnam stock market behaved in January. The Vietnam market only closed a tiny bit lower to the tune of about 1% in the first month of 2022, despite the S&P500 falling 5% and the Nasdaq falling 9% in the same month.


Writing about why a stock market is falling is always guesswork to some degree as we don’t talk to every investor who is doing the selling and ask them what is their motivations were to do so!

However I tend to read a lot of news from Vietnam, and in addition to that fund manager and broker commentaries specifically on the Vietnam stock market. I thought some readers of this blog therefore might be interested to know about Vietnam specific factors that might be leading to stock market weakness. That is aside from just the “Vietnam stocks fell on the back of US stock market weakness” line that gets trotted out too often.

why did the vietnam stock market drop in april?

In terms of Vietnam specific reasons, that arguably led it to underperform the US considerably in the first few weeks of the month, I shall break it down into some possible key factors:

Panic, led by retail investors? – The last couple of years since the pandemic began has seen a surge in retail accounts opened with brokers. Volumes in general on the Vietnam stock market have risen a lot during this time. It does however mean we have far more inexperienced investors in the market these days which I believe makes it vulnerable to sharp down days occasionally like we saw recently on April 25th for example.

Not only are they inexperienced, plenty get tempted to use leverage perhaps before they are ready. I have noticed most Vietnamese stock brokers like to feature prominently such aggressive leveraged products when they look to attract new account openings.

I wrote about the boom in inexperienced Vietnam stock market investors in the below blog post link here:


I am not too concerned from a longer term view if this dynamic is leading to stock market weakness. At some point in the years ahead I expect a lot more appetite from global investors (who have actually been net sellers in recent years). A catalyst eventually should be when Vietnam gets upgraded from frontier to emerging market status. (You can read more about this topic just below):

will vietnam become an emerging market?

This could perhaps occur around 2024 from MSCI indices but FTSE might even act a year or two earlier, see below.


Corruption crackdown in Vietnam, who is next? – We have seen some high-profile arrests for stock price manipulation in recent times. This has shaken confidence in Vietnam stocks, and there is uncertainty as to whether these are somewhat isolated cases, or symptomatic of more widespread issues.

Here is a Reuters article from only a few days back that explores this theme:

Vietnam’s ‘blazing furnace’ crackdown burns $40 bln off stocks | Reuters

This might be somewhat of a concern in the shorter term but you could argue from a long term standpoint such crackdowns could ultimately help confidence from global investors to invest in Vietnam.

Political environment – The China stock market has performed terribly for many years now and it is fair to say most global investors are more comfortable investing in countries with a democratic system. This theme might limit the potential global flows into Vietnam stocks. I don’t agree with this as a factor for Vietnam stocks falling, in fact China’s growth slowing could even see Vietnam benefit from gaining more FDI flows. However it is still possible all the global uncertainties now reduce the appetite for investors generally to seek out a frontier market like Vietnam that they may not be totally familiar with.

Russia – Vietnam is trying to remain neutral and not get involved with events here. Some global investors might prefer Vietnam to openly condemn Russia’s actions, rather than adopt a more neutral / do not engage type approach to events. This is also a factor I don’t particularly agree warrants Vietnam stocks to weaken, but it is nonetheless a possibility that it could have hurt sentiment as far as others see things.

What goes up must come down? – Here I simply note that Vietnam stocks have been one of the star global performers the last 2 years since the pandemic began. In times where many global markets suffer sharp losses, strangely enough you can witness investors take profits from some of the big winners they have. This may be as a source of liquidity to bargain hunt elsewhere on assets that have suffered much greater falls. This type of selling should not be a worrying sign in terms of potential future returns.

I have just listed quite a few Vietnam specific negative factors above for their stock market. Let’s try and be balanced and now look at some reasons why Vietnam stocks could do better than the US stock market this year.


After all despite all the major global news in 2022 already, and market volatility, most analysts still tend to be quite bullish on Vietnam stock market forecasts. This tends to be underpinned by GDP above 6%, very strong EPS growth in the years ahead, and forward P/E ratio of circa 13 times or less based off likely 2022 earnings.

I discussed in a blog post earlier this year why Vietnam stocks, and potential other emerging markets could hold up better in the event of a US stock market crash. Below is the link


However if you want a quick summary of the reasons you can just refer to below:

Valuations – US stocks began the year very expensive according to a range of various quantitative measures. Vietnam stocks on the other hand look attractive based on the forward P/E and EPS forecasts over the next few years.

Inflation / Interest Rates – The Fed is expecting to hike rates considerably however currently rates remain extremely low in the context of their recent high inflation prints. Vietnam on the other hand starts with more conventional interest rates and lower inflation prints.

Technology crash – The S&P500 has a significant weighting to technology stocks compared with the Vietnam stock market. Thus far in 2022 tech stock weakness is leading the declines. If this trend continues that may place the US stock market in a more vulnerable position compared to Vietnam.

Past Performance – Although Vietnam has performed better in the last year or so, the US stock market has been the place to be generally speaking since most global stock markets bottomed in March 2009. This has seen a massive build up in passive flows into US equities since then (something we haven’t seen in Vietnam), therefore a reversal of this trend also makes the US stock market more vulnerable in a bear market compared in Vietnam.

I would be curious if any readers of the blog have been heading for the exit doors and selling their Vietnam stock exposures in the last month?

Is Vietnam a good investment?

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