On September 25th, the stock market continued its downward trend, losing nearly 40 points with hundreds of stocks being sold off to their floor prices. Within a week, the VN-Index has fallen by almost 100 points, nearing the 1,150 point mark – its lowest level in the past month.
Shares were sold due to forced liquidation.
The market's performance at the beginning of the week showed a slight recovery in the morning, but trading remained very cautious. Selling pressure wasn't too strong, but weak capital flow caused most stocks to decline slightly. However, in the afternoon session, the entire market plummeted almost vertically as sudden sell-offs appeared in the securities and real estate sectors, then spread to other sectors, while weak buying pressure was insufficient to stop the market's fall.
Market data shows that across all three exchanges (HoSE, HNX, and UpCoM), 900 stocks experienced price drops, with 175 falling to the floor price, ranging from 7% to 15%. The fact that many stocks fell by 15% to 20% in just a few days triggered margin calls from securities companies and created negative sentiment across the market, especially among individual investors using excessively high leverage (margin).
Many investors suffered heavy losses after several consecutive days of declines in the stock market. Photo: HOANG TRIEU
Many people expressed shock at seeing profits earned over several months wiped out in a short period. For those using margin, forced to sell or pressured to sell by brokerage firms, the losses were even greater. This explains why individual investors sold net nearly 1,440 billion VND in this session. Meanwhile, domestic institutions, foreign investors, and securities firms' proprietary trading desks took advantage of the opportunity to buy net shares with values of 223 billion, 702 billion, and 513 billion VND respectively.
Speaking with a reporter from Nguoi Lao Dong Newspaper, Ms. Tran Khanh Hien, Director of Analysis at MB Securities Company (MBS), affirmed that no negative news was released during the September 25th trading session. The freefall in the market may have been due to profit-taking pressure from investors seeing the market deteriorating, combined with forced selling by securities companies, leading to a wave of sell-offs. "The recent rapid increase in exchange rates has also had a certain impact on the stock market, but not a significant one."
"In fact, at the end of last year, the exchange rate increased even faster and more dramatically, but investors paid less attention because the market had more bad news at that time. Now, with the macroeconomic context stabilizing, even a slight increase in the exchange rate causes investors to worry. The important thing is that individual investors don't have high expectations for the market, so they either take profits or sell out of fear," Ms. Hien stated.
Mr. Truong Hien Phuong, Senior Director of KIS Vietnam Securities Company, also believes that while exchange rates impacted the market in the previous weekend sessions, they did not this time. This is because the exchange rate has stabilized following the State Bank of Vietnam's (SBV) issuance of treasury bills to withdraw money from circulation. Furthermore, exchange rates typically don't immediately affect business operations; they only impact contracts when payments are finalized (usually at the end of the year). Large businesses in the import-export sector will use measures to hedge against exchange rate risks.
According to Ms. Hoang Viet Phuong, Director of the Analysis Center at SSI Securities Corporation (SSI), investors are misinterpreting the State Bank of Vietnam's recent move to withdraw money through treasury bills as a sign of renewed monetary tightening, rather than loosening monetary policy, which is why they are worried and selling off stocks.
In fact, interest rates on 28-day treasury bills have been gradually decreasing over the past three days. For example, the rate offered on September 25th was only 0.49%, while it was 0.5% and 0.69% two days prior. If the State Bank of Vietnam tightened monetary policy, it would not have lowered interest rates to such an extent. Therefore, investors should not panic excessively.
Has the market broken its uptrend?
Regarding market trends in the coming days, Mr. Nguyen Thanh Trung, Head of Investment Consulting Department - Thanh Cong Securities Company (TCSC), believes that due to the rather negative reaction from investors, the downward momentum will continue in the next trading session. If the 1,150-point mark is breached, the VN-Index could fall to a lower level of 1,120 points as capital flows no longer support the market.
Mr. Tran Minh Hoang, Director of Research and Analysis at VCBS Securities Company, predicts that the market may retreat to the 1,140-point level in the next trading session. Therefore, short-term investors need to proactively restructure and streamline their portfolios, maintaining only a low proportion of stocks at 10% - 20% and avoiding buying too early.
Regarding the numerous opinions suggesting that the VN-Index has broken its short-term and medium-term upward trend, Mr. Truong Hien Phuong stated that while such an assessment might be technically correct, it doesn't fully reflect the market and must be based on macroeconomic fundamentals. "Observing the current macroeconomic situation, there are many positive factors such as the State Bank of Vietnam's loose monetary policy and the government 's policy of promoting public investment... these are the main foundations supporting the growth trend of the stock market."
Therefore, if you are holding shares of a company with a solid foundation and growth prospects, investors should not continue to sell off. For investors holding cash, this is an opportunity to gradually accumulate shares," said Mr. Truong Hien Phuong.
Ms. Hoang Viet Phuong also believes that the market is falling too much, so investors with cash can take advantage of the opportunity to gradually buy good stocks because it is rare for good stocks to fall so deeply due to the general market effect.
Sharing the same view, Ms. Tran Khanh Hien believes the overall market trend in the coming period remains positive, especially in the context of low interest rates and the fact that capital has not yet found any investment channel that yields better returns than stocks. Therefore, the stock market may correct in the short term due to continued selling pressure, but investors will re-enter afterwards.
Mr. Huynh Minh Tuan, General Director of FIDT Investment Company, assessed the market correction as understandable, given that leading stock groups such as securities and real estate had risen too much in a short period. In fact, when the market has risen for a long time and created a profit-taking effect, even a single piece of negative news can cause a sharp decline. Regarding the State Bank of Vietnam's move to withdraw money through treasury bills in the open market, Mr. Tuan believes it is merely a measure to curb exchange rate speculation and impact policy interest rates due to the excess liquidity in the entire banking system.
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