Vietnam stocks tumbled by the most since April as leveraged traders exited positions on concerns about liquidity shortages spreading in the property sector.
The benchmark VN Index — which has become the world’s worst-performing major gauge — dropped as much as 5.1% on Thursday, driven lower by property and banking shares. Real estate firm No Va Land Investment Group (HoSE: NVL) slumped 6.9% in its seventh consecutive day of declines. Vietnam Joint Stock Commercial Bank for Industry and Trade (HoSE: CTG) lost nearly 7%.
Investors are growing increasingly concerned about the credit crunch that’s spreading across the property sector, in part due to a sweeping regulatory probe on bond issuances and higher lending rates. Earlier this week, No Va Land — the nation’s second-largest listed developer — was reportedly restructuring its business amid the widening crackdown.
“Margin call pressure is very high and forced investors to sell off and the panic quickly spread across the board, no matter whether the stocks are good or bad,” said Phung Trung Kien, founder of asset management firm Vietnam Holdings Inc. “Sentiment is very weak while there is no supporting information at the moment.”
Credit Crunch Rocks Vietnam’s No. 2 Developer as Woes Spread
Property developers are now struggling to access capital and potential home buyers face tightening credit as the State Bank cautions against risky real-estate sector loans. Vietnam’s corporate bonds sales have dropped by 50% this year given the increased scrutiny, according to the local bond association.
Those problems are hurting an economy that’s struggling to keep inflation under control as well as manage its growing debt burden. The VN Index is down more than 37% this year.