Vietnam Stocks Fall Over 5% Following Probe Into Corporate Bond Violations

Vietnam's VN Index suffered its steepest drop in six months, plummeting over 5.5% amid investor fears sparked by a government report revealing irregularities in corporate bond issuance by major banks and firms. The Government Inspectorate's inspection of 67 bond issuers, including five banks, uncovered violations such as misuse of proceeds, poor disclosures, and delayed payments, shaking confidence in the credit market. Notably, three of Vietnam's largest commercial banks misappropriated proceeds raised through bonds, diverting funds to short-term lending rather than approved long-term projects, intensifying concerns over financial stability. Leading companies, including Vingroup, Vinhomes, and Bank for Foreign Trade of Vietnam, were among the biggest decliners, with trading volumes surging as panic selling ensued. The market downturn also followed Novaland Investment Group's failure to repay $335 million in convertible bonds, compounding investor jitters. This turmoil comes despite Vietnam's recent upgrade to secondary emerging-market status by FTSE Russell, highlighting ongoing challenges in corporate governance and credit market oversight.