Recent strong Vietnam bourse corrections 'very normal': investment fund SSIAM

Corrections during an uptrend are very normal, and investors should set aside a certain ratio of cash to increase the proportion of shares during market corrections, said experts from the SSI Asset Management Company Limited (SSIAM).

The Vietnamese stock market is in a period of unpredictable developments. On Thursday, the VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), surpassed the 1,300-point mark - the highest since April 2022, as investors anticipate a market status upgraded by FTSE Russell from “frontier” to “secondary emerging” in the near future.

However, on Friday, the market suddenly plunged. The skyrocketing selling pressure at the end of the session caused the VN-Index to lose 21.6 points to 1,280. Most groups went down, with real estate, insurance, securities, banking, chemicals, oil and gas, retail, steel, food, beverages, ports, and maritime shipping experiencing the sharpest declines.

At a recent press meeting, Bui Van Tot, portfolio manager at SSIAM - a member of leading broker SSI Securities Corporation (SSI), stated that to bring value to investors, the fund always maintains a certain ratio of cash (about 15% at maximum) to buy stocks during corrections.

“Market corrections are very normal during an uptrend and this is an opportunity for investors who want to participate in the market,” he said.

In investing, Tot noted, emotion management is a factor that is more important than understanding of macro situation and others. "When you're really scared, you should buy. When you feel excited and easy, you should sell.”

“The stock market is in an uptrend during which there will be bumpy periods. In the first sessions of decline, we often observe and proactively prepare a list of stocks in the low price ranges to take action.

“We have a stock filter. Those with low liquidity, prone to speculation, and with transparency-related problems will be eliminated. Therefore, our list features 80-100 codes, allocated to analysts to evaluate to find their real value. For stocks whose prices far exceed their valuations, we consider selling them to have cash to invest in those with lower valuations," said the SSIAM expert.

In the second half of the year, Tot believed that the stock market will be positive, but not yet reach the FOMO (Fear Of Missing Out) stage as the investor sentiment is still affected by the plunge of 2022. Many investors left the market and have not returned yet.

According to the expert, there will not be stories big enough for investors to have FOMO in the second half of the year. "The latest big story is the market upgrade. In case Vietnam's stock market status is upgraded from “frontier” to “emerging” by FTSE Russell, the cash flow will not be large but create an effect on investor sentiment."

"MSCI's upgrade is expected to have a big impact on Vietnam's stock market, changing its quality. However, it will take many years before that becomes a reality. But we expect a market status ungrade by FTSE Russell in the near future."

Finally, the economy has recovered but remains weak. Most businesses have strong growth compared to the low base of 2023 such as steel, retail and aviation; but the groups with a high proportion in the VN-Index like banking began to slow down, he added.