VN-Index plunges to below 1,000 points

Negative investor sentiment amid interest rate hikes, rising exchange rates and corporate bond market tightening pushed Vietnam’s benchmark VN-Index to below the 1,000-point mark last week.

Market corrections came back after a slight recovery in the previous week.

Closing the trading week from October 31 to November 4, VN-Index, which tracks the performance of the Ho Chi Minh Stock Exchange (HoSE), lost 30.21 points or 2.9% to 997.15. Meanwhile, HNX-Index on the Hanoi bourse HNX dropped 9.17 points or 4.3% to 204.56.

The trading value on the HoSE decreased by 7.3% from the previous week to VND52,992 billion ($2.13 billion), while its trading volume was down 4.4% to 2,826 million shares.

The trading value on the HNX fell 25.9% to VND3,683 billion ($148 million), with 280 million shares changing hands, down 25.2%.

NVL of real estate developer Novaland Group, HPG of steel giant Hoa Phat, MWG of Mobile World Investment Corporation, BCM of Investment and Industrial Development JSC and EIB of Eximbank had the most negative impact on the VN-Index. NVL alone robbed the index of nearly 6 points.

Meanwhile, VRE of Vincom Retail JSC, VNM of Vinamilk, VPB of VPBank, and TCB of Techcombank were the main supports.

All groups of stocks plunged in the past trading week. Materials stocks took the lead with a fall of 8.5% in market capitalization due to strong sell-offs in steel stocks following the release of their poor Q3 business outcomes.

Foreign investors were strong net sellers on both bourses to the tune of VND549.13 billion ($22 million). HPG was net sold most with 74.2 million shares, followed by KBC of Kinhbac City Development Holding Corporation and HDB of HDBank with 16.9 million and 4.8 million, respectively. On the other side, FUESSVFL of ETF Ssiam Vnfin Lead was net bought most with 21.8 million shares.

According to Hoang Cong Tuan, chief economist at broker MB Securities (MBS), the U.S. Federal Reserve's (Fed) benchmark interest rate hike by 0.75 percentage points last week, the fourth time in a row, affected investor sentiment.

"Investors now stay alert to companies with large bond balances over fears of increasing financial costs. This was the main reason behind the strong selling pressure on real estate stocks in the week-ending session," he said.

The MBS expert recommended that in the context of great market volatility, a short-term surfing strategy with a reasonable proportion of shares should be prioritized. Investors can choose stocks of well-performing companies with attractive prices, including those in banking, oil and gas, retail and electricity sectors.

Analysts at Saigon-Hanoi Securities (SHS) said that the market is under a selling pressure equivalent to that in March 2020 when Covid-19 broke out, due to macro fluctuations related to interest rates, exchange rates and the bond market. So it is difficult to determine whether the market has hit its long-term bottom yet, they said.

“Therefore, investors should maintain a reasonable proportion of shares in their investment portfolio, prioritizing stocks of companies with good business results and those less affected by the current corporate bond crisis.

Vietcombank Securities (VCBS) advised investors to actively raise the proportion of cash, patiently wait for more positive signals from the market, and limit early bottom-fishing as VN-Index may go down further to the 900-point territory.