The Impact of COVID-19 on Stock Market Returns in Vietnam

Dao Van Hung,Vu Thuy Duong,Nguyen Thi Minh Hue

doi:10.3390/jrfm14090441

Dao Van Hung, Vu Thuy Duong + Show 1 more

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https://doi.org/10.3390/jrfm14090441

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Abstract

This paper studies the impacts of COVID-19 on the performance of the Vietnamese Stock Market—a rapidly growing emerging market in a country that has to date successfully controlled the disease outbreak. The study uses a random-effect model (REM) on panel data of stock returns of 733 listed companies on both HOSE (the Ho Chi Minh Stock Exchange) and HNX (the Hanoi Stock Exchange) from 2 January 2020 to 13 December 2020. The study shows that the number of daily COVID-19 confirmed cases in Vietnam has a negative impact on stock returns of listed companies in the market. The impacts were more severe for the pre-lockdown and second-wave period, compared to impact for the lockdown period. The impacts also differed across sectors, with the financial sector being the most affected. With significant government control and influence over the bank-dominated financial system, the financial sector was expected to absorb some of the negative shocks hitting the real sector. Such expectations were reflected in the stock market movement during the pandemic.

Highlights

Vietnam is currently one of the most dynamic emerging countries in the world with a rapidly growing economy and stock market (The World Bank 2020)
This paper studies the impact of the COVID-19 on Vietnam’s stock market performance during pre-lockdown, lockdown, and second-wave periods, looking at 733 companies listed on both Ho Chi Minh Stock Exchange (HOSE) and HanoiStock Exchange (HNX) from 2 January 2020 to 31 December 2020
Via a random-effect model (REM) of panel data regression, the research showed that the rise in the number of daily COVID-19 confirmed infections cases in Vietnam has a negative effect on stock returns of listed companies in the market

Summary

Introduction

Vietnam is currently one of the most dynamic emerging countries in the world with a rapidly growing economy and stock market (The World Bank 2020). The stock market of Vietnam is made up of two principal stock exchanges: the Ho Chi Minh Stock Exchange (HOSE) listing companies with charter capital above VND 120 billion; and the Hanoi. Stock Exchange (HNX), listing companies with above VND 30 billion The Vietnamese stock market is no exception, and the VN-index declined dramatically in the first three months of the year (Giang and Yap 2020) from 31 December 2019 to 30 March 2020. Market capitalization declined 37.4 billion USD in absolute value, or 28% in relative value in this period.

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