Evaluating the Volatility of Market Risk of Viet Nam Construction Industry after the Low Inflation Period 2015-2017

Research Article

Austin J Bus Adm Manage. 2019; 3(1): 1037.

Evaluating the Volatility of Market Risk of Viet Nam Construction Industry after the Low Inflation Period 2015-2017

Ngoc Huy DT*

Banking University, International University of Japan, Japan

*Corresponding author: Dinh Tran Ngoc Huy, Graduate School of International Management, International University of Japan, Niigata, Japan

Received: November 06, 2019; Accepted: December 06, 2019; Published: December 13, 2019


The Vietnam economy has gained lots of achievements after the financial crisis 2007-2011, until it reached a low inflation rate of 0.6% in 2015. This paper measures the volatility of market risk in Viet Nam construction industry after this period (2015-2017). The main reason is the vital role of the construction company group in Vietnam in the economic development and growth in recent years always go with risk potential and risk control policies.

This research paper aims to figure out how much increase or decrease in the market risk of Vietnam construction firms during the post-low inflation period 2015-2017.

First, by using quantitative combined with comparative data analysis method, we find out the risk level measured by equity beta mean in the construction industry is acceptable, i.e. it is little lower than (‹) 1.

Then, one of its major findings is the comparison between risk levels of construction industry during the financial crisis 2007-2009 compared to those in the post-low inflation time 2015-2017. In fact, the research findings show us market risk fluctuation, measured by equity beta var, during the post-low inflation time has increased moderately.

Finally, this paper provides some ideas that could provide companies and government more evidence in establishing their policies in governance. This is the complex task but the research results shows us warning that the market risk volatility might be higher during the post-low inflation period 2015-2017. And our conclusion part will recommend some policies and plans to deal with it.

JEL classification numbers: G00; G390; C83

Keywords: Risk management; Asset beta; Financial crisis; Construction industry; Policy


Throughout many recent years, Viet Nam construction market is evaluated as one of active markets, which has certain positive effect for the economy. The development of construction industry goes parallel with real estate and construction material markets. And Vietnam construction firms take advantages of providing real estate assets with high quality but low cost.

Generally speaking, central banks aim to maintain inflation around 2% to 3%. Increases in inflation significantly beyond this range can lead to possible hyperinflation, a devastating scenario in which inflation rises rapidly out of control. Looking at (Figures 1,2), we can see the Vietnam economy has controlled inflation well. High inflation might lead to higher lending rate and harm the construction industry because of rising construction material price.