VN-Index drops below 1,400 points amid strong selling

Vietnam’s benchmark VN-Index fell 21.73 points to 1,384.72 on Wednesday, a six-month low amid strong selling pressure.

The bearish trend has been seen for two weeks, keeping the index mostly in the red for several sessions. The clearer sectors in the trend included securities, real estate, construction, and banking.

“The three sectors of real estate, securities and banking are closely related, also known as the money-making trio of the market. The market regulators are tightening control on bonds issuance of property developers, so other sectors are also affected,” said Huynh Minh Tuan, Brokerage Director at Mirae Asset Securities.

“The market is undergoing restructuring from the regulators and this has a great impact on investor sentiment,” he added.

Tan Viet Securities Inc. stated that the current selling pressure and bearish trend may cause more market decreases. From the perspective of medium and long-term investment, the firm considers this as a chance for investors to carefully select stocks to increase the proportion, and they should have several disbursements on the trend.

Securities firm VDSC predicted the VN-Index is likely to recover, therefore investors should not make stock sell-offs if their portfolio does not have a high risk.

Similarly, Yuanta Vietnam and Saigon-Hanoi Securities said the market is likely to soon form a short-term bottom then recover, so investors should not continue sell-offs, based on their risk tolerance.

Le Long Giang, Chairman of the Vietnam Financial Advisors Association (VFCA), noted investors should not let themselves be swept by trends, and should build up market understanding. No gains no pains, he said, adding that it is investors who will help to make the market more transparent by buying or not buying a certain stock.

According to market experts, the fact that banks have recently increased their deposit interest rates has also affected the stock market as bankers are attracting deposits again.

Nguyen Duy Hung, Chairman of leading broker Saigon Securities, said when the capital cost increases, obviously the stock market goes down, and this is happening across the world as global capital supply is under tightened control.

He added so far this year, the VN-Index has shrunk 7%, SP500 in the US down 6.4%, the Korean stock market dropped 9%, the Hang Seng Index in Hong Kong plunged 9.7%, and the Chinese market decreased up to 16.5%.

Hung quoted Bloomberg as citing the price to earnings (P/E) ratio of the Vietnamese stocks is 13.5%, a relatively low figure. "Meanwhile, many sectors are benefting from the current global situations."

"The market is bringing more opportunities to investors than risks, compared with the time when the market was overheated at its peaks."

While domestic investors were rushing to sell-offs, foreign investors kept buying in. They spent VND7,920 billion (almost $345 million) on these purchases in a series of five consecutive bearish sessions but their selling stood at VND7,340 billion (around $320 million), putting the gap at about $25 million. For Wednesday, they focused on purchasing the stocks GEX, DXG, VHM and DPM, and fund certificates of E1VFVN30.

Prime Minister Pham Minh Chinh on Wednesday ordered the Ministry of Finance and the State Bank of Vietnam to actively deploy measures to stabilize the financial and stock markets.