Stocks continue to decline

VN-Index drops to nearly 1,200 points

Yesterday (November 15), the stock market continued to be in the red and recorded the fourth decline in the five trading sessions this week. At the 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 returned to its low of the first week of August. Yesterday, the number of stocks that decreased in price dominated the entire trading session.

In the basket of 30 large-cap stocks in VN30 on the HOSE, at the end of the session, 3 stocks successfully reversed the trend but the slight increase was only around 0.5% while 26 stocks decreased in price and 1 stock stood at the reference. Notably, the total trading value of the market increased compared to the previous session with more than 20,687 billion VND. Of which, the HOSE alone increased by 8.37% in volume and 15.6% in value compared to the previous session. The increase in liquidity during the sharp decline is believed to be due to the pessimistic psychology of investors and this is the clearest manifestation of the sell-off activity.

Vietnam's stock market has been continuously declining in recent months.

Not only domestic investors sold, but foreign investors also continued their net selling streak. In yesterday's session, foreign investors net sold more than VND 1,330 billion, up 67.78% compared to the trading session on November 14 (VND 792.81 billion). Since the beginning of November, foreign investors have been net sellers continuously in every trading session. If counting from the beginning of 2024, only January recorded net buying by foreign investors, the rest have been net sellers continuously since February. Of which, the net selling scale since the beginning of this year on the HOSE floor reached more than VND 70,000 billion - a record level since the stock market started operating.

According to Mr. Huynh Anh Tuan, General Director of Dong A Securities Company, VN-Index has been growing compared to the beginning of the year but has been continuously decreasing recently. The first reason that can be mentioned is that foreign investors have been continuously selling very strongly. They withdrew money from many markets, including Vietnam, to invest in the US market because it would be more profitable. The evidence is that the US stock market has continuously set new record peaks but VN-Index only fluctuated between 1,200 - 1,300 points. One reason for the sharp decline in stocks is that most of the stocks sold were blue-chip stocks, which had a big impact on the VN-Index.

Although the transaction value of foreign investors does not account for a large proportion of each trading session of the market, it also creates a sense of apprehension for domestic individual investors. Therefore, domestic cash flow is also cautious and less likely to participate. At the same time, it is not excluded that some "groups" take this opportunity to "step" down to have the opportunity to buy back goods at low prices. For example, in yesterday's session, when the support threshold for VN-Index at 1,220 points was considered quite strong, but when approaching it, it was sold a lot and was "broken" at the end of the session. Therefore, the support level of 1,200 points is only psychological and is likely to continue to be lost early next week but will also recover because many stocks falling to attractive prices will attract buying money.

World USD increases, pushing stocks down

What is puzzling is that the Vietnamese stock market has been continuously declining in the context of good macroeconomic growth, and the business activities of many enterprises in the first 9 months of 2024 have still grown positively. Moreover, the number of newly opened securities accounts of investors has been increasing continuously. Specifically, according to the Vietnam Securities Depository and Clearing Corporation, the number of newly opened domestic individual investor accounts in October was 156,689 accounts and the cumulative number of newly opened accounts in the first 10 months of 2024 was nearly 1.73 million accounts, 4.4 times higher than the whole year of 2023. The total number to date is more than 8.97 million securities accounts of domestic investors. In addition, after 10 months of 2024, foreign investors opened a total of 2,052 new accounts. The total number of securities accounts of domestic and foreign investors at the end of October exceeded 9 million.

Mr. Nguyen The Minh, Director of Customer Research and Development at Yuanta VN Securities Company, explained that the number of newly opened securities accounts is still increasing, but that is only raw data. In reality, there are many accounts that do not trade. Many individual investors who were active before also withdrew money to switch to other investment channels such as gold because of higher profits. The VN-Index hovered around the 1,200 point range to below 1,300 points, making many people discouraged. The large net selling by foreign investors further weakened the cash flow into the market.

"The stock market in many countries has increased sharply in recent times mainly due to technology stocks, but in Vietnam, the number of stocks in this industry is too small to affect the VN-Index. Meanwhile, the real estate stock group, which often has an impact on the VN-Index, has decreased since 2023 and has not been able to recover when businesses also have low business results. The banking and securities stocks group also does not have much breakthrough information to attract cash flow from individual investors," he said, emphasizing: The Vietnamese stock market still depends on more than 90% of the trading volume of individual investors while they mostly only react to the market. When the market is bad, they run, when it is good, they buy. Currently, seeing foreign investors continuously net selling and no capital flows participating strongly, they choose to stay out.

Mr. Minh predicted: The net selling trend of foreign investors may not end immediately when the USD in the world is still increasing. The difference in interest rates between USD and VND is positive. This means that if in the past, depositing VND in banks was more profitable, now foreign investors will gain more profit by holding USD and also switching to investing in the US stock market to gain higher profits. "Currently, the pressure on the USD/VND exchange rate is still very large. However, the trend of USD cooling down will also happen soon. At that time, foreign investment capital will return to the stock market. In the short term, VN-Index may continue to fluctuate in the range of 1,200 - 1,300 points and the probability of a deep drop below 1,200 points is also unlikely because there is no bad news that will strongly impact the market," Mr. Nguyen The Minh shared.

Sharing the same view, Mr. Huynh Anh Tuan said that in the past, the domestic stock market almost performed similarly to the US stock market. However, this year, due to the pressure from the continuous increase in the world USD, many currencies, including Vietnam, have decreased. This has caused foreign investors to continuously sell net to withdraw investment money into the US. The increasing value of the USD makes the US stock market benefit more. In addition, the high growth of the technology industry with new trends such as AI, semiconductors, etc. has contributed strongly to the US stock market continuously setting record highs, but Vietnam does not have many technology stocks, so this wave is not enough to help the VN-Index increase.

Foreign investment capital in general from the beginning of the year until now has focused on the US market. That has caused the US stock market to increase sharply and this capital flow will continue to stay there. Therefore, the Vietnamese stock market will still be "sluggish" and can only increase more clearly from mid-2025 when foreign capital stops net selling and returns to 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 late period of 2025.

Economist, Dr. Dinh The Hien

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