Vietnamese shares tumble on China devaluation hinh anh 1An investor follows trading at ACB Securities (Photo: VNS/VNA)
Vietnamese shares tumbled for the second day on August 12, following the information that China had devalued its currency twice in two days, forcing the State Bank of Vietnam to revise the exchange rate band.

China's central bank on August 12 morning cut its official guidance rate by another 1.6 percent after a sudden devaluation of nearly 2 percent on August 11 that triggered a turmoil in world financial markets.

This is the second devaluation by China in two days, pushing the yuan down to 6.3306 per US dollar, the lowest since August 2011. Global stocks and emerging market currencies sank for two days in a row after China's moves.

The State Bank of Vietnam (SBV) said the devaluation of yuan would greatly affect trade between the two countries. China is Vietnam's biggest trading partner.

In response, SBV on August 12 also decided to revise the exchange rate band from plus/minus 1 percent to plus/minus 2 percent, setting the ceiling rate at 22,106 VND per US dollar and the lowest rate at 21,240 VND.

On the HCM Stock Exchange, the benchmark VN-Index lost nearly 9 points, or 1.44 percent, to close the session at 604.24 points.

The market condition was negative with 155 stocks declining, 64 rising and 89 ending flat.

"People feels anxious and insecure about this unusual news. Nobody thought China would devalue its currency," said Le Dac An, Head of Investment Division at Tan Viet Securities Co.

Discussing the impacts of Chinese and Vietnamese central banks' decision, An said it was not easy to say this was good or bad as the fall of dong could promote Vietnamese exports, but in the other hand, cheaper Chinese goods would also flood the Vietnamese market and throttle the domestic producers.

Banks and oil and gas companies were under heavy selling pressure on August 12 and most of these shares saw prices go down. Meanwhile, export stocks which are deemed to benefit from SBV's decision were muted.

"Investors think the economic condition is still unstable and they tend to avert risks by selling stocks and holding onto cash," An said.

Liquidity declined on August 12, with more than 112 million shares worth 2.13 trillion VND (97.7 million USD) traded by the end of the session, down 10 percent in volume and 20 percent in value from levels of August 11.

"The market saw a two-month rise during late May-July and hit the peak of over 635 points on July 27. It is entering a technical correction since then and is exposed to downside risk in the context of high selling forces and low demand," An said.

On the Hanoi Stock Exchange, the HNX-Index also edged down 1.3 percent to end at two-and-a-half-month low at 82.75 points. It saw a loss of 0.68 percent on August 11.

Of total 364 shares, almost half closed unchanged while the number of decliners doubled that of advancers here.

Activities of bargain investors in the last trading minutes lifted liquidity here as both market volume and value dropped 20 percent from the previous session, totalling 50.4 million shares worth 606.4 billion VND (27.8 million USD).-VNA