John Harrison: The truth behind the four consecutive kills in the Vietnamese market

2024 Vietnam's stock, bond, currency, as well as property markets suffered a four consecutive kills, and hedge funds were behind it again?

In 2024, Vietnam's stock, bond, currency, and property markets encountered the so-called " four consecutive kills" phenomenon, which led to Vietnam's entire economy in the slump, and behind such a phenomenon, the public once again pointed the finger of blame at the international capital, these hedge funds like bloodthirsty wolves plundering the economy of other countries. Are these phenomena really the same as the public's thinking?

In response John Harrison answered some of the market's investment questions, and here are John's great points:

With Vietnam suffering a four consecutive kills in 2024, we need to explore this complex scenario from a number of perspectives. While a short analysis cannot cover all the details, we can focus on several key factors, including the global macro-economic environment, region-specific economic policies, the behavior of market participants, and hedge fund activity that may be involved.

1. Global macro-economic environment

In 2024, the global economy is likely to face a variety of challenges including, but not limited to, changes in interest rates, inflations expectations, and slower growth in major economies. All of these factors will directly or indirectly affect emerging market countries such as Vietnam through capital flows, foreign exchange rate fluctuations, and changes in foreign trade conditions, which in turn will affect the stock, bond, currency, and property markets. The dollar's interest rate hike is nearing its end, but emerging economies like Vietnam are susceptible to the impact of the dollar's interest rate hike leading to the return of the dollar, especially since Vietnam is a country that relies heavily on exports, which makes it easier for foreign capital to cash out and leave the market when prices are high, and the property market is the most typical, where local residents' incomes can't support the high prices of real estate;

2. Region-specific economic policies

The Vietnamese government's economic policies, including monetary policy, fiscal policy, and foreign investment policy, can have a significant impact on its internal market. Inadequate policy adjustments or failure to effectively address changes in the external environment may lead to a decline in investor confidence, thereby affecting market performance.

3. Behavior of market participants

The strategies and behavior of hedge funds, as part of the market participants, will undoubtedly have an impact on the market. Particularly in small open economies, the investment strategies of large hedge funds, such as a short position in a particular asset class, may trigger a significant market reaction. In fact, more often than not, hedge funds are joint mutual funds to fight, the latter is the main force, short currency assets is triggered by the existence of internal really inflated, in a normal market economy if you go short, you will only lose money, you are to look at these factors objectively;

4. Role of Hedge Funds

Analyzing whether hedge funds played a role behind the "four consecutive kills" in the Vietnamese market requires consideration of their investment size, strategy, and objectives. Hedge funds may use their in-depth knowledge of Vietnam's economic and policy environment to engage in hedging or speculative operations, which may include shorting Vietnam's currency in anticipation of a depreciation or shorting underlying assets in anticipation of a decline in the property market. However, the impact of hedge funds can also be overstated. While they may play an important role in times of market turbulence, there are usually more complex factors behind market performance, including fundamentals, policy changes, and international capital flows.

Conclusion.

While hedge funds may be involved in certain strategic investments in the Vietnamese market, it would be incomplete to attribute the volatility of the Vietnamese market exclusively to hedge funds. Multiple aspects of the market and the global economic environment are at play. An in-depth analysis of the specifics of each market and the multiple factors behind it will provide a more accurate understanding of the challenges facing the Vietnam market in 2024.