Stocks fell 95 points, what should investors do if they get “margin called”?

(Dan Tri) - Many investors were confused, some even had "margin calls" during the record stock market drop.

The stock market fell a record nearly 95 points in the first session of the week on October 20. Many investors were confused, some even received a “margin call” (a margin call is a notice from a securities company asking investors to add more money or collateral to their accounts to bring the margin ratio to a safe level).

Record drop of nearly 95 points

655 stocks decreased with 148 stocks hitting the floor. VN-Index closed at 1,636 points, down a record 94.76 points (equivalent to a decrease of 5.47%).

On HoSE alone, 108 stocks fell to their lowest levels. Liquidity increased sharply with trading volume on HoSE reaching over 1.7 billion units, equivalent to a value of over VND53,000 billion.

The sharp decline also "blew away" more than VND412,300 billion (about USD16 billion) of HoSE's capitalization, VND19,500 billion of HNX's capitalization and VND29,650 billion of UpCOM's capitalization; the total market capitalization decreased by VND442,000 billion.

A series of stocks hit the floor in the session on October 20 (Photo: Screenshot).

Sharing with Dan Tri newspaper reporter, Mr. Nguyen The Minh - Director of Research and Development of individual customers, Yuanta Vietnam Securities Joint Stock Company - said there were 2 main reasons leading to today's sell-off.

The first is related to the Government Inspectorate's information on a series of bond violations, focusing on banks and real estate companies.

Specifically, the Government Inspectorate has just announced the conclusion of discovering a series of violations in bond issuance activities of 5 banks, 37 joint stock companies and 25 limited liability companies.

Of these, 18 issuers belong to Novaland Group, 6 are from Masan and many other enterprises. This information has strongly affected market sentiment, especially the group of financial - real estate stocks. The Government Inspectorate even transferred Novaland's bond violations to the Ministry of Public Security .

According to Mr. Minh, this raises concerns about a deep decline scenario like in 2022 - a period when the stock market fell sharply after peaking in the first quarter, affected by a series of negative information related to high bond debt at real estate companies.

Second, this information is happening in the context of the market having a fairly high margin debt. “This year, since April until now, there has not been any strong fluctuations, while the margin at securities companies has been very tight, causing the market to be under strong downward pressure,” said Mr. Minh.

According to statistics from the financial reports of nearly 80 securities companies, by the end of the second quarter, the total outstanding margin and self-trading loans reached more than VND620,000 billion.

Although third quarter data is not yet available, with the recent market growth, margin debt is likely to hit a new peak, creating high risks when the market reverses.

At the same time, interest rates in the interbank market also increased significantly. During the week from October 13 to October 17, overnight interest rates increased from 4.73% to 5.75% - the highest level in more than 2 months, equivalent to an increase of 1.02 percentage points during the week. This development increased short-term capital costs and somewhat affected short-term investment sentiment.

Some analysts are also concerned about the fluctuations in the world market affecting investor sentiment. As the US-China trade tensions continue to escalate, officials from both countries have just confirmed that they will resume trade negotiations in Malaysia this week, but this still makes investors in the region maintain a cautious state.

What should investors do?

Mr. Minh added that compared to a technical adjustment (about 1-2%), a shock of a decrease of over 5% like this will quickly recover. Experts predict that the market will likely have another decline, but then the decline will quickly end.

“If it goes down quickly, it will go up quickly. I think the market will soon regain its balance and go up,” said Mr. Minh. Therefore, the expert’s advice to investors is to hold their portfolios. As for investors with high leverage ratios and who have been “margin called,” they should deposit their assets to bring the ratio to a safe level.

Source: https://dantri.com.vn/kinh-doanh/chung-khoan-giam-95-diem-nha-dau-tu-bi-call-margin-nen-lam-gi-20251020172658163.htm