Reporter of Nguoi Lao Dong Newspaper talked with Mr. Huynh Anh Tuan, General Director of Dong A Bank Securities Company, about the unusual fluctuations of the stock market in recent days and gave appropriate advice to investors.
* What do you think is the main reason for the sharp decline in the stock market in recent days?
- Mr. HUYNH ANH TUAN: The sharp decline in the stock market in recent days may have originated from information related to the increase in exchange rates, the State Bank (SBV) has withdrawn tens of thousands of billions of VND through the treasury bill channel to stabilize the exchange rate. However, I think that while the interest rate of VND is still on a downward trend, banks have excess money that cannot be lent, affecting the exchange rate, so the SBV's regulation of money withdrawal is only to ensure financial security, not a signal of monetary tightening, so it is not too worrying.
The main thing is that while investors are worried about the market falling, bad rumors appear, most likely intentional by the market maker, causing those using high financial leverage (margin) to panic and sell at all costs, leading to a sell-off, causing the index to fall deeply.
Regarding the rumor story, every time the market fluctuates strongly, unverified negative information appears in stock groups on social networks, causing confusion for investors. We say we must clean up and make the market healthy, but this keeps happening over and over again, and has not been thoroughly handled. Therefore, investors themselves must be sober in recognizing what is true news and rumors to avoid being too negative and pessimistic and acting in an uncontrolled crowd.
* In your experience, how does the market perform after sharp declines? How do the proprietary trading activities of securities companies and foreign investors affect the market in sessions like these?
- In the session on September 26, the pressure to liquidate securities companies has cooled down, the sell-off is no longer too great. Surely the market after consecutive deep declines will have a few recovery sessions because stocks falling to attractive levels will have investors participating in bottom fishing.
We have seen that in these sharp declines, foreign investors have returned to net buying after a long period of strong selling. Or the self-trading sector of securities companies also bought a lot more than they sold. They see this as an opportunity to collect stocks at good prices. The self-trading sector of securities companies and foreign organizations knows very well whether the reason for the market decline is legitimate or not, because they are very professional and have good analysis teams. Importantly, they are not as pessimistic as domestic individual investors, so they are bold in disbursing.
* It is a fact that most individual investors in the market do not analyze deeply and quickly like large organizations, many people are suffering heavy losses and are very confused, what advice do you have for them at this time?
- As we have seen, the current savings interest rate is only 5%-6%/year, while on the stock market there are many stocks of businesses with good growth, stable profits and annual dividends of 25% but the stock price is only over 20,000 VND/share.
I believe that the stock market trend will remain positive in the next year. Next year, the market will have many bright spots related to the operation of the KRX system, market upgrade, and increased attraction of foreign investors. In particular, Vietnam and the US will upgrade their relationship to a comprehensive strategic partnership, opening up a series of opportunities to attract investment and trade. Therefore, this is the best time for investors to develop a clear investment strategy and buy stocks.
However, investors need to consider when using margin because this is a double-edged sword. If investors have an unstable mentality, unclear investment strategy, choose the wrong stocks and still use margin, it will be difficult to handle when the market falls. At that time, investors cannot handle it in time and leave the account for the securities company to sell to recover debt, which will cause huge losses.
Many investors are worried because of heavy losses in just a few short sessions. Photo: HOANG TRIEU
In case the investor does not use margin but the account is losing heavily, he should not buy the average price down. Instead, the investor needs to calmly consider whether the stock he holds is falling more than the market or not? If it falls too much, it is better to cut the loss and buy it back later, than to buy the average price down and then suffer double the loss.
In fact, in major stock markets around the world , individual investors do not account for as high a proportion as in Vietnam. Therefore, the Vietnamese market is prone to strong fluctuations based on the psychology of individual investors. For example, an investor may plan not to buy more stocks today, but when the market increases, they rush to buy. When the market turns to decrease, they become afraid and sell their stocks. Therefore, investors need to control their emotions, avoid herd mentality, and especially adhere to discipline and specific strategies to limit risks.
Investors are worried
In the trading session on September 26, VN-Index continued to fall sharply by 15.24 points (-1.32%), down to 1,137.96 points; HNX-Index lost another 1.75 points (-0.76%), down to 229.75 points and UpCom-Index also fell by 0.27 points (-0.3%), down to 88.43 points. Notably, the market recovered quite well in the first half of the afternoon session, hundreds of stocks increased sharply, even hitting the ceiling, VN-Index recovered up to 11 points but was suddenly sold off at the end of the session, thereby activating a liquidation order, causing the market to continue to fall sharply.
While individual investors continued to net sell VND1,138 billion, domestic organizations, foreign investors and securities companies' self-trading investors still net bought a total of VND1,137 billion.
Talking to a reporter from Nguoi Lao Dong Newspaper, Mr. Nguyen The Minh, Director of Analysis and Research of Individual Customer Products - Yuanta Vietnam Securities Company, commented that information such as the State Bank continuing to withdraw money through the treasury bill channel or Circular 06 related to the regulation that "banks are not allowed to lend for the purpose of depositing money back to banks" affects securities companies... making investors worried.
In the international market, the USD continued to strengthen and US bond yields continued to rise after the US Federal Reserve's (FED) policy meeting. These factors were beyond the market's expectations, leading to concerns about rising inflation in the international market, affecting the USD/VND exchange rate and domestic stocks... "Investors' sentiment is not stable, cash flow is weak, so when the VN-Index recovers, they sell, typically in the group of securities and real estate stocks. This has happened in the past 2-3 sessions, especially in the last 10 minutes of the session on September 26, causing the VN-Index to reverse and decrease sharply," said Mr. Nguyen The Minh.
Regarding the regulation that "banks are not allowed to lend money for the purpose of depositing money back to banks" in Circular 06 of the State Bank, which is said to affect securities companies, Mr. Nguyen Thanh Lam, Director of Research and Analysis, Personal Clients - Maybank Securities Company, commented that there is currently no clear conclusion on whether the term "deposit" here includes certificates of deposit (CD) or not? But investors are concerned that this will reduce the funding sources of banks for securities companies.
It is estimated that the interest from CDs only accounts for about 10% of the total interest income and about 2%-4% of the after-tax profit of securities companies, so the impact, if any, is not much. Not to mention, when the stock market grows well, the demand for margin loans increases, securities companies are likely to shift capital to these activities...
Thai Phuong
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