Stocks continue to decline.

VN-Index fell to near 1,200 points.

Yesterday (November 15th), the stock market continued its downward trend, marking its fourth consecutive day of decline in five trading sessions this week. At market close, the VN-Index fell 13.32 points, or 1.08%, to 1,218.57 points; the HNX-Index fell 2.28 points (1.02%) to 221.53 points; and the UPCoM-Index fell 0.58% to 91.33 points. Thus, the VN-Index has returned to its low point from the first week of August. Yesterday, the number of declining stocks dominated throughout the trading session.

Among the 30 large-cap stocks in the VN30 index on the HOSE exchange, three stocks successfully reversed their downward trend by the end of the session, but with slight gains of only around 0.5%, while 26 stocks declined and one stock remained at the reference price. Notably, the total trading value of the market increased compared to the previous session, reaching over 20,687 billion VND. Specifically, the HOSE exchange saw an 8.37% increase in volume and a 15.6% increase in value compared to the previous session. The increase in liquidity during the sharp decline is attributed to pessimistic investor sentiment, clearly indicating a sell-off.

The Vietnamese stock market has been continuously declining in recent months.

Not only domestic investors sold off, but foreign investors also continued their net selling streak. Yesterday, foreign investors sold a net total of over 1,330 billion VND, a 67.78% increase compared to the November 14th trading session (792.81 billion VND). Since the beginning of November, foreign investors have been consistently net sellers in trading sessions. If we consider the period from the beginning of 2024, only January saw net buying by foreign investors; from February onwards, this group has been consistently net sellers. In particular, the net selling volume on the HOSE exchange since the beginning of the year has reached over 70,000 billion VND – a record high since the stock market began operating.

According to Mr. Huynh Anh Tuan, General Director of Dong A Securities Company, the VN-Index has continued to grow since the beginning of the year but has recently been declining. The first reason could be the strong selling pressure from foreign investors. They are withdrawing money from many markets, including Vietnam, to invest in the US market because it offers higher returns. Evidence of this is that the US stock market has repeatedly set new record highs, but the VN-Index has only fluctuated between 1,200 and 1,300 points. Another reason for the sharp decline in stocks is that most of the selling is in the blue-chip group, which has a significant impact on the VN-Index.

Although the trading value of foreign investors does not account for a high proportion of each trading session, it has created a sense of apprehension among domestic individual investors. Therefore, domestic capital flows are also cautious and participate less. At the same time, it cannot be ruled out that some "groups" are taking advantage of this opportunity to push prices down in order to buy back shares at lower prices. For example, in yesterday's session, the support level for the VN-Index at 1,220 points was considered quite strong, but it was heavily sold off when it approached that level and was breached by the end of the session. Therefore, the 1,200-point support level is only psychological and is likely to be lost again at the beginning of next week, but it will recover as many stocks that have fallen to attractive prices will attract buying interest.

The rise in the US dollar globally pushed stocks down.

What is puzzling is the continuous decline in the Vietnamese stock market despite strong macroeconomic growth and positive business performance for many companies in the first nine months of 2024. Furthermore, the number of new investor securities accounts continues to increase. Specifically, according to the Vietnam Securities Depository and Clearing Corporation, 156,689 new domestic individual investor accounts were opened in October, and the cumulative number for the first ten months of 2024 reached nearly 1.73 million, 4.4 times the number for the whole of 2023. In total, there are now over 8.97 million securities accounts held by domestic investors. In addition, after the first ten months of 2024, foreign investors opened a total of 2,052 new accounts. The total number of securities accounts held by domestic and foreign investors at the end of October exceeded 9 million.

Mr. Nguyen The Minh, Director of Customer Research and Development at Yuanta Securities Vietnam, explained that while the number of newly opened securities accounts continues to increase, this is only raw data. In reality, many accounts are not trading. Many individual investors who were previously active are withdrawing their money to switch to other investment channels such as gold because of the higher returns. The VN-Index hovering between 1,200 and below 1,300 points has discouraged many. The large net selling by foreign investors has further weakened the inflow of capital into the market.

"The stock markets in many countries have surged recently, mainly due to technology stocks, but in Vietnam, the number of stocks in this sector is too small to significantly impact the VN-Index. Meanwhile, real estate stocks, which usually influence the VN-Index, have declined since 2023 and have yet to recover, as businesses in this sector also have low business results. Banking and securities stocks also lack significant breakthroughs to attract capital from individual investors," this expert said, emphasizing that the Vietnamese stock market still relies more than 90% on individual investor transactions, while they mostly react to market trends. When the market is bad, they sell; when it's good, they buy. Currently, seeing foreign investors continuously selling off and no significant capital inflow, they choose to stay on the sidelines.

Mr. Minh predicted: The net selling trend by foreign investors may not end immediately as the USD continues to rise globally. The interest rate differential between USD and VND remains positive. This means that while previously depositing VND in banks yielded higher returns, now foreign investors benefit more from holding USD and are also shifting to investing in the US stock market for even higher profits. "Currently, the pressure on the USD/VND exchange rate remains very high. However, a cooling down trend for the USD will soon occur. At that time, foreign investment capital will return to the stock market. In the short term, the VN-Index may continue to fluctuate within the 1,200-1,300 point range, and the probability of a sharp drop below 1,200 points is also low because there is no extremely negative information that would significantly impact the market," Mr. Nguyen The Minh shared.

Sharing the same view, Mr. Huynh Anh Tuan believes that previously, the domestic stock market almost mirrored the US stock market. However, this year, due to pressure from the continuously rising global USD, many currencies, including Vietnam's, have depreciated. This has led to continuous net selling by foreign investors to withdraw investment funds from the US. The higher the USD value, the more beneficial it is for the US stock market. In addition, the technology sector, with new trends such as AI and semiconductors, has experienced high growth, strongly contributing to the US stock market continuously reaching record highs. However, Vietnam does not have many technology stocks, so this wave is not strong enough to help the VN-Index increase.

Foreign investment flows from the beginning of the year until now have been heavily concentrated in the US market. This has led to a strong increase in the US stock market, and these funds continue to remain there. Therefore, the Vietnamese stock market will remain stagnant and will only see a more significant increase from mid-2025 when foreign capital stops net selling and starts buying. Low interest rates and continued economic growth in Vietnam in 2025-2026 will contribute to attracting foreign capital to the stock market in the latter part of 2025.

Economist, Dr. Dinh The Hien

Source: https://thanhnien.vn/chung-khoan-lien-tuc-di-thut-lui-185241115204859562.htm