Vietnam’s benchmark VN-Index fell almost 12% in September compared with August, making it the exchange's biggest one-month drop in 30 months.
The index closed at 1,132.11 points Friday, the last day of September. Its September shrinkage brought the Vietnamese stock market into the group of the world's worst performers of the month.
The Ho Chi Minh City Stock Exchange’s (HoSE) capitalization narrowed by more than VND588 trillion ($24.64 billion) at the end of the month.
The State Bank of Vietnam increased regulatory interest rates by one percentage point on September 23, following the U.S. Federal Reserve’s rate hikes. This had a negative impact on the psychology of securities investors last week.
Right from the first trading session of the week, selling pressure increased and the Vietnam market went deep into the red. Trading sessions between Monday and Thursday remained in the red, but the VN-Index closed Friday six points higher than Thursday. For the whole week, the index dropped 71.27 points, down 5.9%.
Market liquidity in September also shrank significantly over August. The average matching value on HoSE was under VND11,900 billion ($498.6 million), down 16% against August; the second-lowest figure since the beginning of 2021, after this July.
This week, VIC of Vingroup, Vietnam’s largest private conglomerate, and VHM of Vingroup subsidiary Vinhomes exerted the most negative impacts as the duo removed more than 14 points in the VN-Index. They were followed by MSN of Masan Group, VCB of Vietcombank, GVR of Vietnam Rubber Group, and VNM of Vinamilk.
On the contrary, NVL, LGC, VHC and TCH of Novaland, CII Bridges, Vinh Hoan Corp., and Hoang Huy Group, respectively, were the tickers with the most positive impacts, but their contributions were not very high.
For the whole week, foreign investors continued to be net sellers on both HoSE and the Hanoi Stock Exchange, with a net value of VND978.66 billion ($41 million).
In September, foreign investors net sold more than VND3,000 billion ($125.7 million) on HoSE. On the contrary, they'd net bought about VND2,500 billion ($104.8 million) in the first eight months of the year.
In the opposite direction, securities firms were net buyers during the week, their purchases totaling VND1,688 billion ($70.7 million).
According to experts at broker Saigon-Hanoi Securitie (SHS), the Vietnamese securities market was under considerable pressure from the Fed's rate hikes during September, and the State Bank of Vietnam’s rate hikes. Exchange-traded funds (ETFs) were also under pressure of capital withdrawals as bonds in other countries became more profitable.
SHS noted that the market was still undervalued compared to the average value of the last five years. But the downtrend would likely continue in the short and medium term, it said.
Similarly, Vietcombank Securities is of the view that Friday’s result was likely a technical recovery, while the downtrend is set to continue. The broker’s team recommended that investors continue to wait patiently for the market to show signs of balance, and not rush to catch the bottom
MB Securities expert Hoang Cong Tuan said the Fed’s rate hikes had hit the investors' confidence, but he believed the Vietnamese market would become stable soon thanks to the Vietnamese economy’s healthy indicators.
Huynh Minh Tuan, founder of investment company FIDT, felt the current state was good to improve portfolios. Capital costs are on the rise, therefore investors are withdrawing money from the stock market. “Not a surprise,” he said.