Shortly after the Brexit vote results were announced on Friday, Vietnam’s benchmark VN-Index fell 35 points to below 600 points as the afternoon session began. The index grew to 620.77 points at the close, as investors later became much calmer. Liquidity was high, with VND4.8 trillion (US$214.29 million) worth of shares traded.

Global stock markets also lost about $2 trillion in value on Friday after Britain voted to leave the EU, while sterling suffered a record one-day plunge to a 31-year low and money poured into safe-haven gold and government bonds, Reuters reported on Saturday.

 

The blow to investor confidence and the uncertainty the vote sparked could keep the U.S. Federal Reserve from raising interest rates as planned this year, and even spark a new round of emergency policy easing from major central banks, according to Reuters.

 

However, Phan Dung Khanh, investment advisory director with Maybank Kim Eng Securities Co., said the Vietnamese stock market was only shaken for a short time as investors were blindsided, having expected Britain to vote to stay in the EU before the official voting results.

Investors rushed to sell shares when the results were against their expectation, which explains the high liquidity for the Friday session, Khanh added.

 

In the meantime, the euro and British pound sterling also fell dramatically on Vietnam’s foreign exchange market. The GBP closed Friday at VND31,142, down VND2,112 from a day earlier, according to Eximbank. At Vietcombank, the sterling lost VND2,155, selling at VND31,155. Eximbank listed the EUR at VND25,107, down VND383 from a day earlier.

 

Gold prices in Vietnam ended yesterday at VND35.1 million ($1,567) a tael (37.5 grams), losing VND800,000 ($35.71) from Thursday.

 

Economic expert Le Trong Ninh said the Brexit will weak the GBP against the USD, affecting the VND, and the State Bank of Vietnam will have to enact stronger measures to stabilize the market.

 

Ninh added however that the market will be able to adjust itself to adapt to the new situation.

 

 

In terms of bilateral trade ties between Vietnam and the UK, industry insiders said the situation will become a little rougher in the immediate term, but there will be no significant impacts from the Brexit.

 

Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association (Vitas), Britain’s vote to leave the EU will have certain impacts on the roadmap to realize the free trade agreement between Vietnam and the EU in the coming time.

 

However, the affect will not be significant as the UK currently accounts for only 3 percent of Vietnam’s textile export to the EU, he explained.

 

“In the immediate term, export orders to the UK are unfazed,” he said. “There will certainly changes in the longer term but I believe there will be no severe impact for Vietnam’s textile industry.”

 

Similarly, it is not likely for the Vietnamese footwear sector to be affected by the Brexit, said Nguyen Duc Thanh, chairman of the Vietnam Leather, Footwear and Handbag Association (Lefaso).

 

Compared with other EU countries, the UK also accounts for a modest share of Vietnam’s footwear export, so the impacts, if any, will not be significant, he elaborated.