While most mainstream media is focused on villainizing Putin and the ongoing 'diplomacy' in Ukraine, we warned Monday of the dramatically escalating tensions between Vietnam and China over oil-drilling in disputed waters [5]. The initial verbal to and fro - Vietnam angry at the move and China shunning them - was followed by physical interactions (multiple rammings and water-cannon use) [6] and the US then got involved (laying the blame firmly at China's foot calling the move "provocative"). The capital markets appear a little more concerned about where this 'tension' leads as the Vietnamese stock market crashed almost 6% - its largest drop in 13 years.
[7]
Vietnam stocks posted their biggest retreat since 2001, extending a six-week selloff that turned the benchmark index into the world’s worst performer, amid escalating tensions with China.
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The VN index has wiped out most of the 20 percent advance through its March high that had made the gauge this year’s top performer in Asia.
“The talk is all about the political tension,” Michel Tosto, the head of institutional sales at Viet Capital Securities in Ho Chi Minh City, said by phone. Some investors are showing signs of “panic” while others are “bottom-fishing” for beaten-down stocks, he said.
Vietnam said this week it’s prepared to take measures over China’s placement of an exploration rig in disputed waters, as the U.S. called the Chinese move “provocative” given recent regional tensions.
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“This row between China and Vietnam has put cold water on the market,” Marc Djandji, a partner at Asean Strategy Group, said by phone. “This is a serious thing. It’s not something that is resolved in a day. People are hoping for some sort of way to resolve this internationally.”
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“The sea tensions are worrying investors a lot, and prompted many of them to sell,” Hoang Thach Lan, the Ho Chi Minh City-based brokerage unit head at MHB Securities Co., said by phone today. “However, there are also some investors who viewed the tensions as a temporary situation and they took this chance to buy. We see trading volume is very large.”
So BTFD on the biggest drop in 13 years because, hey, what can go wrong when the world's largest economy steps all over your mineral resources and no one in the world gives a shit...