Vietnam stock market loses $20 bln over four sessions

Plunging prices swept away nearly VND480 trillion ($20 billion) from Vietnam’s stock market over four sessions in the week April 15-19.

The market includes the Ho Chi Minh Stock Exchange (HoSE), Hanoi Stock Exchange, and Unlisted Public Company Market. The steep decline blew away VND413.7 trillion ($16 billion) from the HoSE alone.

Ending the week, with one day off to celebrate the Hung Kings’ Commemoration Day on Thursday, the VN-Index, which represents the HoSE, plummeted 101.75 points, or 7.97%, to 1,174.85.

This marked the sharpest decrease in a week since the case involving Saigon Commercial Bank (SCB) and real estate developer Van Thinh Phat was brought to light in October 2022.

On Monday, the VN-Index lost close to 60 points, the deepest drop in nearly two years. The decline slowed during the Tuesday session, but continued in the last two sessions, both losing over 1.5%.

Strong sell-offs on Friday also caused the index to lose more than 23 points before lunch. In the afternoon, "bottom-fishing" demand gradually appeared, narrowing the decline to more than 18 points, and the index closed the trading week at 1,174.85 points.

Foreign investors were strong net sellers to the tune of VND2.25 trillion ($88.43 million) on the HoSE.

Red overwhelmed all stock groups, of which securities suffered the strongest sell-offs with BSI of BIDV Securities down 20.70%, FTS of FPT Securities 18.70%, VDS of Viet Dragon Securities 17.31%, and VIX of VIX Securities 16.41%.

Real estate stocks also felt the pressure, such as FIR of First Real JSC (-23.45%), CEO of CEO Group (-21.33%), DXG of Dat Xanh Group (-21.21%), and NHA of South Hanoi Housing and Urban Development Corporation (-19.91%). Industrial real estate, rubber, and banking stocks suffered the same fate.

Before losing more than 100 points in a week, the VN-Index had been anchored around its 19-month peak for quite some time.

The decline was noted by analysts at Saigon Securities in a recent report: "We have seen risk factors that could cause the market to need a "rest", including a push for profit-taking after the market recovered nearly 25% over five consecutive months, exchange rate fluctuations, and intervention measures by the State Bank of Vietnam," they said.

Others held that the slump was due to an unattractively high valuation of stocks. Dstock data from VNDirect Securities showed that the VN-Index’s P/E (price to earnings) ratio peaked 15.08 times on April 2, 2024, while the market's average in the past five years was in the range of about 10-15 times.

Truong Hien Phuong, a senior director at KIS Vietnam Securities, noted that the P/E of many large stocks has increased 15-18 times.

"The P/E of the stock market and many stocks is already higher than the general level and those in other stock markets in the region. Therefore, corrections are necessary for stock valuations to become attractive," Phuong said.

Another reason was the tensions between Iran and Israel, he said, adding that high USD/VND exchange rates have concerned investors despite the SBV’s intervention measures.

From a long-term perspective, experts still have a bright outlook for the Vietnamese stock market. Phuong recommended that with this deep fall, investors should buy stocks in civil real estate, industrial real estate, public investment, securities, oil and gas, steel, and banking.

Nguyen The Minh, chief analyst at Yuanta Vietnam Securities JSC, recommended investors pay attention to the oil and gas services and technology groups as they tend to increase sustainably and steadily. Short-term investors can put down money on securities or banking tickers, he added.

According to Saigon-Hanoi Securities (SHS), the VN-Index has returned to a wide accumulation range of 1,150-1,250 points and lost the momentum to form an uptrend. However, the broker still believed that there is no risk for the index to fall into a new downtrend cycle.

Short-term investors should take advantage of market recovery periods to lower their share proportion to a safe level, SHS advised. For medium and long-term investors, as the market is moving back to a wide accumulation range of 1,150-1,250 points and the process may be long, they should not buy shares at present but patiently wait for more reliable signals.

Sharing the same view, Viet Dragon Securities (VDSC) advised investors to consider recoveries to take profits or structure their portfolios to minimize risks.