Despite Global Stock Market Rebound, Vietnam and India Fund Returns Plummet

Supply Shortage and Concerns Over Third Epicenter

[Asia Economy Reporter Song Hwajeong] As the global stock markets, which had plunged due to the novel coronavirus infection (COVID-19), have stabilized, the returns of major overseas funds have turned positive, but Vietnam and India funds have not escaped negative returns.

According to financial information company FnGuide on the 1st, among 21 major regional and country-specific funds over the past week, only Vietnam, India, and Middle East & Africa funds recorded negative returns. Vietnam funds posted a return of -3.39%, India -5.22%, and Middle East & Africa -0.15% as of the previous day.

The VN Index of the Ho Chi Minh Stock Exchange (HOSE) in Vietnam has fallen 24.9% since the beginning of this month. Poor supply and demand conditions appear to be obstacles to a stock price rebound. KB Securities researcher Lee Changmin said, "As of the 24th, the market capitalization of companies listed on the Ho Chi Minh Exchange fell below 120 trillion won, and as the market size shrinks, supply and demand have become even more important than before." He added, "Foreign investor supply and demand is essential, but since March, the redemption pressure on domestic Vietnam equity funds has intensified, causing capital outflows that worsen market supply and demand." The net asset value of Vietnam funds decreased by 74.2 billion won since the beginning of the year, with 24.9 billion won withdrawn in the past week alone. Lee explained, "With the stock market decline, redemption requests for Vietnam equity funds have increased, leading to loss cuts on individual top market capitalization stocks. In an environment where trading volume and supply-demand factors are limited, even small redemption demands can cause significant market shocks."

The Indian SENSEX index has dropped 23% since the start of this month. The lockdown measures due to the spread of COVID-19 and foreign selling pressure have driven the market decline. The Indian government has imposed a nationwide lockdown for three weeks until the 14th to curb the spread of COVID-19. Hana Financial Investment researcher Lee Jaeseon said, "With factories nationwide minimizing operations and domestic passenger flights banned, the entire Indian economy is effectively under lockdown, with about 60% of economic activity expected to halt temporarily." He added, "The economic loss is estimated at around 150 trillion won, and a downward revision of India's economic growth forecast for this year is inevitable." Foreign selling driven by global risk asset avoidance also contributed to the market decline. NH Investment & Securities researcher Kim Hyungrae said, "Foreign investors continue to sell amid concerns that the third COVID-19 wave (first in China, second in Europe) may begin in India."

On the other hand, funds in other regions all showed positive returns over the past week. Japanese funds recorded the highest return at 10.95%, followed by North America at 8.6%, Europe at 6.06%, and China at 4.32%.

Compared to the beginning of the year, most funds are recording double-digit negative returns. Latin America and Brazil funds were the worst performers at -42.71% and -45.17%, respectively, followed by Vietnam at -30.81%, India at -29.12%, Europe at -23.56%, and North America at -17.14%.

This content was produced with the assistance of AI translation services.