Reasons for record stock drop

The stock market closed the first trading session of the week yesterday (October 20) with red and blue covering the board. VN-Index caused a 'shock' when it suddenly plummeted to 1,636.43 points, equivalent to a decrease of nearly 95 points.

Trading at a securities company - Photo: QUANG DINH

This is the sharpest drop in terms of points ever, surpassing the record drop on April 3, 2025, when the index "evaporated" nearly 88 points. The VN-Index was again under widespread selling pressure in the final minutes of the session when investors simultaneously dumped stocks.

Panic gripped the entire market, dragging most sectors into red. The VN30 basket - representing large-cap stocks - fell even deeper, losing more than 106 points as all 30/30 codes fell sharply, many hitting the floor. Across the entire market, 775 codes fell, of which 150 hit the floor, leaving only 125 codes in the green.

Liquidity skyrocketed with nearly 2 billion shares changing hands, total transaction value reaching approximately VND59,000 billion, reflecting panicked cash flow withdrawing from the market.

Speaking with Tuoi Tre , Mr. Bui Nguyen Khoa - Deputy Director of BIDV Securities Analysis Center (BSC) - said that after a period of strong growth, mainly in some large-cap stocks, the market is entering a necessary adjustment phase.

According to Mr. Khoa, the important support levels are currently around 1,600 and 1,550 points. Although there may still be fluctuations in the short term, the stable macro foundation is still a factor that strengthens the medium and long-term prospects of the market.

"In general, a deep market correction is inevitable when looking back at previous uptrend cycles. Historically, every strong uptrend cycle has had corrections of 10-15%," Mr. Khoa commented, affirming that there is no specific negative information strong enough to explain this decline, because most of the fundamental factors have been reflected in the price.

Mr. Duc Vu - Deputy Director of Vietcap Securities Analysis Department - said that the negative market sentiment is driven by two factors.

Firstly, the change in the short-term technical signal of VN-Index after the decline last Friday and then the conclusion of the Government Inspectorate 's inspection on the issuance of corporate bonds reported by the media at the weekend.

According to Mr. Vu, the support zone of VN-Index is currently around 1,560 - 1,620 points, corresponding to the index's fluctuation range from the beginning of August until before the information about the market upgrade appeared.

"Therefore, it is likely that after touching this support, the VN-Index may recover," said Mr. Vu.

Mr. Nguyen The Minh - Director of Research and Development of Individual Clients of Yuanta Securities Vietnam, also said that the main reason for the Vietnamese market's decline did not come from macro factors or business results, but from widespread investor concerns.

According to Mr. Minh, domestic macroeconomic factors are all positive: GDP growth is stable, business results in the third quarter are positive, and the stock market has positive potential in the medium and long term. Therefore, although the market is in a short-term negative phase, Mr. Minh expects the sharp decline to end soon.

"With a normal technical adjustment, it usually decreases by 1-2%. But when the market decreases by 5-6% in just one session, it is a sign that this decline will not last long," Mr. Minh commented.

In contrast to the shock drop of VN-Index, Asian stocks rose as conciliatory comments from US President Donald Trump over the weekend eased concerns about US-China trade tensions.

Of which, the Nikkei 225 index (Japan) led the regional increase when it jumped 3.47% to 49,235 points, setting a new historical peak, the Hang Seng index (Hong Kong) increased 2.42% to 25,858 points, other markets in Asia also increased simultaneously.

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BINH KHANH

Source: https://tuoitre.vn/ly-do-chung-khoan-giam-ky-luc-20251020231055987.htm