Reasons for the record stock market drop.

The stock market closed yesterday's (October 20th) first trading session of the week with a mix of red and green dominating the trading board. The VN-Index caused a shock by unexpectedly plummeting to 1,636.43 points, equivalent to a drop of nearly 95 points.

Transactions at a securities company - Photo: QUANG DINH

This was the sharpest drop in points ever recorded, surpassing even the record decline on April 3, 2025, when the index plummeted nearly 88 points. The VN-Index again faced widespread selling pressure in the final minutes of the session as investors simultaneously dumped shares.

Panic gripped the entire market, dragging most sectors into the red. The VN30 basket – representing large-cap stocks – fell even more sharply, losing over 106 points as all 30 stocks declined significantly, with many hitting their lower limit. Across the entire market, 775 stocks fell, including 150 that hit their lower limit, while only 125 managed to stay in positive territory.

Liquidity surged with nearly 2 billion shares changing hands, bringing the total transaction value to approximately 59,000 billion VND, reflecting a panic selling of funds out of the market.

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

According to Mr. Khoa, key support levels are currently around 1,600 and 1,550 points. Although short-term fluctuations may still occur, a stable macroeconomic foundation remains a strong factor supporting the market's medium- and long-term prospects.

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

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

Firstly, there was a change in the short-term technical signals of the VN-Index after last Friday's decline, and secondly, the conclusion of the Government Inspectorate 's inspection regarding corporate bond issuance, which was reported in the media at the end of the week.

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

"Therefore, it is highly likely that after touching this support level, the VN-Index may experience a recovery," Mr. Vu said.

Mr. Nguyen The Minh, Director of the Individual Customer Research and Development Division at Yuanta Securities Vietnam, also believes that the main reason for the Vietnamese market's downturn does not stem from macroeconomic factors or business results, but from the widespread fear among investors.

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

"With normal technical adjustments, the decline is usually 1-2%. But when the market falls by 5-6% in just one session, that's a sign that this downturn won't last," Mr. Minh commented.

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

The Nikkei 225 index (Japan) led the regional gains, surging 3.47% to 49,235 points, setting a new all-time high, while the Hang Seng index (Hong Kong) rose 2.42% to 25,858 points, with other Asian markets also seeing gains.

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BINH KHANH

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