Rumor of banker's arrest wipes $2bln off Vietnam stock market

By Minh Son August 10, 2017 | 01:16 am PT

The government has stepped in to quell investor fears, saying false rumors sparked the crash.

Deptuy Prime Minister Vuong Dinh Hue has stepped in to calm investors after more than VND45.8 trillion ($2 billion) was wiped off Vietnam’s stock market on Wednesday.

Hue reassured investors that the stock market was healthy at the launch of the country's first derivatives market on Thursday.

On Wednesday, Vietnam’s benchmark VN Index dropped 17.92 points, its biggest loss since early last year, right after it hit a nine-year high of 796.62 points on Tuesday.

Hue blamed the crash on “untrue rumors”.

Word started spreading on social media early on Wednesday morning that Tran Bac Ha, former chairman of the Bank for Investment and Development of Vietnam (BIDV), one of the biggest lenders in the country, had been arrested in connection to a $400 million graft case that saw Tram Be, another banking tycoon, arrested last week.

But local media on the same morning quoted Ha, who retired last September, as saying: “Everything's normal.”

A source from the Ministry of Public Security also told Phap Luat Ho Chi Minh City in the afternoon that no new arrests had been made.

Market insiders said the downtrend was led by the rumor together with the bearish world market. Blue chips and financial stocks were the worst hit.

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Most banking stocks are still in the red. Photo by VnExpress

Among 12 banking stocks, 11 of them closed down on Wednesday, with their combined value dropping more than VND15.7 trillion. BIDV alone lost VND7.5 billion.

“I hope both investors and businesses will believe in us,” Hue said on behalf of the government, asking them to be cautious about unofficial information.

“There have been groundless rumors like this before. Investors should be calm and confident in the tight and transparent market,” he said.

In September 2013, Ho Chi Minh City authorities fined three Vietnamese investors for spreading the same rumor about Ha's arrest, causing the VN-Index to drop 18.1 points, or 3.66 percent.

The market has stablized today, but most banking stocks are still in the red.