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Vietnam Stocks Drop Most Since August After Moody’s Cuts Rating

Dec. 16 (Bloomberg) -- Vietnam stocks slumped, dragging down the benchmark index by the most since August, after Moody’s Investors Service lowered the country’s credit rating.

Vincom Joint-Stock Co., Vietnam’s biggest publicly traded property developer, and Bao Viet Holdings, the nation’s largest insurer, both slumped more than 4 percent, pacing stock declines. Equities fell after Moody’s yesterday cut the country’s long-term foreign-currency rating to B1 from Ba3, citing the risk of a balance of payments crisis and a drop in foreign reserves as inflation accelerates and the nation’s currency weakens.

The VN Index slid 2.7 percent to 480.21, the biggest decline since Aug. 24, at the 11 a.m. close on the Ho Chi Minh City Stock Exchange. The measure was the worst performer in Asia today. It rallied 16 percent from a three-month low on Nov. 17 through yesterday, when the gauge closed at its highest level since July 30. Stocks have climbed as the government took steps to combat inflation including tightening bank lending.

“The timing of the Moody’s downgrade was just after a three-week rise so market players may have used that as an excuse to take profits and stay on the sidelines for now,” said Mark Canizares, head of equities at Manulife Asset Management (Vietnam), which has about $280 million of assets.

Vincom retreated 4.7 percent, the most since May 19, to 102,000 dong. Bao Viet lost 4.8 percent, the biggest decline since Sept. 10, to 69,500 dong.

‘Debt Distress’

The Moody’s rating, four steps below investment grade, leaves Vietnam on par with Sri Lanka and Mongolia, according to data compiled by Bloomberg. The ratings company also highlighted “debt distress” at state-owned Vietnam Shipbuilding Industry Group, known as Vinashin.

The company had debt of about 86 trillion dong ($4.4 billion) as of June, the government said in August. Vinashin’s potential failure to make debt payments is likely to undermine the credit quality and profitability of Vietnam’s banks, Standard & Poor’s said on Dec. 13.

FPT Corp., Vietnam’s biggest listed telecommunications and software company, sank 3 percent to 65,500 dong, the lowest level since June 8. Vietnam Export-Import Commercial Joint-Stock Bank lost 4.7 percent, the most since Nov. 26, to 16,400 dong.

To contact Bloomberg News Staff on this story: Nguyen Kieu Giang in Hanoi at giang1@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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