VIETNAM NATIONAL UNIVERSITY, HANOI UNIVERSITY OF LANGUAGES AND INTERNATIONAL STUDIES ******* ENGLISH FOR ECONOMICS Case Study -COVID-19 and the Stock Market Student name: Le Hoang Anh Student ID: 16051393 Hanoi August, 2020 1|Page TABLE OF CONTENT I, INTRODUCTION… Purpose of the report Conceptual Background II, ANALYSIS… The stock market before the Covid 19… The effects of cobid 19 on Vietnam’s stock market… III SOLUTIONS… Solutions of the government Solutions of the investors… IV, PREDICTION AND RECOMMENDATION FOR THE INVESTORS… Prediction… Recommendation for the investors… V, CONCLUSION… 2|Page Student name: Le Hoang Anh Student ID: 16051393 FINAL ASSIGNMENT Topic 3: COVID-19 and the Stock Market I INTRODUCTION The purpose of the report This report focuses on the effects of the 19 Covid pandemic on the stock market and industries of Vietnam Besides, I will mention some of the solutions that the government has applied and propose some solutions to help investors minimize the above impacts Conceptual background The stock market refers to the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publiclyheld companies take place It provides stockbrokers and stock buyers and sellers a platform and means to trade and trade stocks, bonds, and other securities Stock exchanges also provide services for issuance and retrieval of securities as well as financial vehicles and events such as dividends The stock market is affected by many factors at the same time No single factor can affect the stock market Instead, many factors come together to form an overall investment environment and affect the stock market Investors must understand all factors that can affect the stock market in order to predict the future of the stock market Some factors that could 3|Page affect the stock market such as: the economy, the monetary policy of the government, political changes and so on II ANALYSIS The stock market before the Covid 19 By the end of 2019, the VN-Index reached 960.99 points, an increase of 7.7% compared to the end of 2018, higher than regional countries such as Singapore, Malaysia, Thailand and Indonesia Vietnam's stock market in 2019 is considered the highest growth in Southeast Asia Market capitalization increased by 10.7% compared to the end of 2018, reaching 4.4 million billion VND, equivalent to 79.2% of GDP in 2018 and 72.6% of GDP in 2019 For the derivative stock market, although it has been officially in operation for two years, the market has had good and stable growth There are two products on the derivative market: futures contracts on the VN30 index and five-year government bond futures The number of derivative trading accounts by the end of 2019 has reached 90,860 accounts, an increase of 58% compared to the end of 2018 Besides, according to the Ho Chi Minh City Stock Exchange (HoSE), as of December 31, 2019, the stock market capitalization on the stock exchange reached 3.29 million billion, equivalent to 143 billion USD, up 14.6% compared to By the end of 2018, accounting for about 95% of the market capitalization of listed shares However, the average liquidity on the market decreased sharply compared to 2018 in both volume and value On HoSE, the average trading volume per session in the year reached 189.2 million shares, equivalent to a value of VND 3,765 billion / day, compared to the same period in 2018, it decreased by 17.8% in volume and 26 respectively, 8% of transaction value 4|Page The effects of Covid 19 on the Vietnam’s stock market Covid-19 sends VN-Index plunging to biggest losing session in 19 years The VN-Index fell 8.48 points, or 0.91 percent to 928.14 points, its lowest point since February 11 last year And the VN30-Index for Vietnam’s 30 biggest market caps fell 0.7 percent, with 20 losing and gaining Covid 19 also made the stock indexes of many sectors decline The most affected sectors are insurance (-32%), oil and gas (-32%), travel and entertainment (-30%), retail (29%) Besides, there are a few sectors that are not affected too much, such as chemical (-6%), health (-7%), construction and materials (-12%), banking (14%) III SOLUTIONS Solutions of the government As of early April, due to the influence of covid 19, the VN-Index has decreased by 30.4% VASB has proposed 12 solutions to support the market, but so far, only solutions have been applied The first solution is shortening the processing time for purchasing documents of treasury stock of enterprises from days to day This is to help enterprises buy their own stocks immediately when the value of the said stocks drop way below the intrinsic value of the enterprises Secondly, The Ministry of Finance issued Circular No 14/2020 / TT-BTC on March 18, 2020, which reduced prices and completely exempted from collection for 15 types of securities services Continuously discounting (from 10% - 50%), there are services, in which: Discount 10% for services including: transaction service on the 5|Page underlying market, derivative market; securities depository service; Discount from 15% -20% for services including: position management service, margin asset management service on the derivative stock market Discount from 30% 50% for services including: guaranteed warrant listing management service; rights exercise service; securities transfer service; auction service, competitive offering Continued no fee - completely waived for services including: listing registration service; securities registration; online connection service for the first time; securities lending and lending services through the VSD system; member registration of derivative securities trading; clearing member registration And the last solution of the government is that The State Security Commission has instructed listed companies to extend the time to hold the annual general meeting of shareholders in 2020, to organize the online congress and to ensure the requirement of prevention of Covid-19 epidemic The solutions are given quite quickly, but the fact that the stock market still falls strongly shows that the panic psychology of investors still covers the whole market This is also the general psychology of global financial investors Solution of the investors Facing to the changes in the stock market due to epidemic concerns, many investors overreacted, choose to sell to prevent risks due to falling stock prices due to epidemics, while some investors think that this is an opportunity to buy shares 6|Page IV PREDICTION AND RECOMMENDATION FOR THE INVESTORS Prediction In the time ahead, the stock market will continue to be supported by positive information The Covid-19 epidemic has now been basically controlled in Vietnam, measures of social distance have been loosened, along with the Government's support policies for businesses in need have helped the indicators The economy in May showed signs of improvement compared to the previous month (export turnover of goods in May 2020 was estimated at 18.5 billion USD, up 5.2% from the previous month; total retail sales consumer goods and services revenue in May was estimated at 384.8 trillion dong, up 26.9% over the previous month ) The government also promotes public investment to promote growth, according to which the total public investment capital allowed to be realized by the state budget in 2020 is nearly 700 trillion VND, 2.2 times the real capital disbursement in 2019 In addition, the net sale of foreign investors as well as statistics on tourism services, industrial production, and import-export that are affected by the epidemic will also make Vietnam's stock market unable to make breakthroughs in short term Therefore, in the coming time, it is still necessary to have more flexible solutions to promptly cope with the changes of epidemics Recommendation for the investors The most important thing at this time is that investors must keep a calm mind before the market's fluctuations Besides, Investors should prioritize investment in businesses in industries less affected by the Covid-19 epidemic such as technology, essential consumption, fertilizers, and export sectors in 7|Page which Vietnam is self-sufficient in supply raw materials and is expected to recover strongly when the Covid-19 epidemic is over like the fisheries sector V CONCLUSION The above report has presented an overview of the effects of Covid 19 on Vietnam's stock market, including stock indices and on securities firms across the country In addition, government’s policies to mitigate the impacts have also been mentioned And finally, there are proposals to help investors to cope with the pandemic this year 8|Page Reference How Vietnam Contained COVID-19 and Why its Economy Will Rebound (2020, May 5) Retreived from https://e.vnexpress.net/news/business/dataspeaks/five-million-vietnamese-workers-lose-jobs-to-covid-19-4089701.html COVID-19 and the Effects on Supply Chains in Vietnam (2020, April 10) Retreived from https://www.vietnam-briefing.com/news/covid-19-effectssupply-chains-vietnam.html/ Nguyen Xuan Thom (1999), English for finance and banking, The gioi publishers 9|Page ... COVID-19 and Why its Economy Will Rebound (2020, May 5) Retreived from https://e.vnexpress.net/news/business/dataspeaks/five-million-vietnamese-workers-lose-jobs-to-covid-1 9-4 089701.html COVID-19... insurance (-3 2%), oil and gas (-3 2%), travel and entertainment (-3 0%), retail (29%) Besides, there are a few sectors that are not affected too much, such as chemical (-6 %), health (-7 %), construction... V, CONCLUSION… 2|Page Student name: Le Hoang Anh Student ID: 16051393 FINAL ASSIGNMENT Topic 3: COVID-19 and the Stock Market I INTRODUCTION The purpose