What do foreign investment funds say about the unusual decline of Vietnamese stocks?

This is the assessment of Dragon Capital Vietnam Fund Management Company regarding the sharp decline of VN-Index in recent sessions. The stock market has lost more than 100 points in just one week, many stocks have decreased by 15%-20%, making investors worried.

Dragon Capital Vietnam pointed out the impacts that may be affecting the stock market such as: pressure from global macro factors, specifically the US Federal Reserve (FED) signaling the possibility of raising interest rates in November and China's economy facing many challenges... creating tension among investors.

News of the exchange rate appreciation, along with the State Bank’s recent measures to issue treasury bills to regulate money supply in the market, have caused market sentiment to become unstable. Some securities companies have taken measures to tighten financial leverage, creating a strong sell-off in recent trading sessions...

Quỹ đầu tư nước ngoài nói gì về đợt sụt giảm bất thường của chứng khoán Việt Nam? - Ảnh 1.

The stock market rebounded in this morning's trading session, September 26.

According to Dragon Capital, historical models show that the market often fluctuates strongly in the final stages of the Fed's interest rate hike cycle. This time is no exception and there will be short-term fluctuations in the next period until November.

Financial leverage ratios at some major securities companies have fallen by about 11% from their peak. Typically, during market corrections in a long-term uptrend, leverage ratios often have to be adjusted further, sometimes up to 20%.

However, experts from Dragon Capital Vietnam believe that investors should remain calm and observe during this period. Because leaving the market at this time may not be a good decision, because fluctuations in the range of 5% to 12% in a bull cycle are not uncommon.

Assessing the State Bank's continuous move to withdraw money through the treasury bill channel, Maybank Securities Company believes that this is a measure to reduce exchange rate pressure, bringing the exchange rate to the target level (+/-3% for this year).

In August and September, the exchange rate increased rapidly and showed signs of exceeding this target threshold, so intervention was necessary and the State Bank is using the method of withdrawing VND through the sale of treasury bills.

"This is a carefully calculated move based on the observation that the system's liquidity is in excess and there is no need to use the foreign exchange selling tool like last year. In 2022, the operator sold 25 billion USD from foreign exchange reserves," said Mr. Quan Trong Thanh, Director of Maybank Research Analysis.

Mr. Vo Kim Phuc - Deputy Head of Analysis Department, BETA Securities Company - also said that the State Bank's move to withdraw money through the treasury bill channel to reduce exchange rate pressure is an appropriate move, and does not have a negative impact on the stock market. However, investors are often sensitive to information about "withdrawing money" so they react negatively like in the recent down sessions.

"In the current period, although the macro context and business prospects are expected to be brighter in the last two quarters of the year, in the short term, investor sentiment may be affected by the story of money withdrawal through treasury bills of the State Bank. And the market is likely to experience strong fluctuations, so investors should be cautious in using leverage" - Mr. Vo Kim Phuc recommended.

Source