The reason why VN-Index suddenly dropped nearly 50 points in the first session of the week and investors' expectations that the main index of the Vietnamese stock market would surpass the 1,300-point mark were quite far away after the trading session on August 5. The wave of sell-offs quickly rose from the beginning of the session, spreading across all stock groups.
In the spotlight, the VN30 large-cap stocks group all plummeted, the whole group "flew" nearly 49 points with 30/30 stocks decreasing in price.
Closing, VN-Index “broke” the 1,200-point threshold, stopping at 1,188.07 with a decrease of 48.53 points (-3.92%). This is the second session that VN-Index lost more than 40 points since the beginning of this year.
Although liquidity has improved somewhat, it is not extraordinary with the matching value reaching about VND 21,260 billion on HoSE.
In terms of market breadth, the entire market recorded 844 stocks falling, of which 127 hit the floor. Most of the real estate, banking, securities, steel, oil and gas, and fertilizer stocks were in the red with a relatively strong decrease.
The sharp decline also wiped out more than VND198 trillion (~USD8 billion) of HoSE’s capitalization. As of the end of August 5, HoSE’s capitalization was only VND4.86 trillion.
The unusual performance of the index in the first trading session of the week made many investors panic and look for the reason.
Commenting on market developments, Mr. Nguyen The Minh - Director of Yuanta Vietnam Securities Analysis said that in the trading session on August 5, the Japanese yen recorded a high increase again, especially the recent increase caused a wave of capital withdrawal from the Japanese stock market.
Especially the sell-off of technology stocks. This group of stocks, from the beginning of 2024 until now, is the group that has pulled the index up strongly in many markets such as the US Nasdaq, the Japanese market, the Korean market, etc. These are markets where technology stocks account for a high proportion of capitalization, so there has been a sharp decline.
The negative developments of the Japanese market in particular and the global market in general have caused Vietnamese investors to fall into the “Domino” effect, selling stocks out of inertia. The Vietnamese stock market today was “affected” by this wave.
“In fact, investors are quite panicked, "running away" following the wave of global asset sell-offs despite the good macro situation and stable internal businesses. The loss of the 1,200-point mark of VN-Index even triggered a sell-off in the Vietnamese market, combined with margin pressure, causing the market to fall even deeper.", Mr. Minh stated,
Mr. Minh added, looking back at market valuations, the times the VN-Index reached the 1,200 point mark, the market's P/E fell to around 10 times. History shows that when P/E falls to 10x, it is likely the bottom of the market.
On the other hand, the fundamental story of the company is much more attractive. Although the downward pressure is still there, the current risks are much lower than the market's upside opportunities. Therefore, the expert Yuanta expects the market to regain the 1,200 point mark in the next few sessions.
In addition, the current stock yield is approximately 9%/year while the savings interest rate is 5.5-6%/year. Investors are seeing the market as quite bad and are afraid, following the crowd effect, but will soon return, so the cash flow will soon improve.
“Only when the market is overvalued, investors will run away for a long time and return when the market is sufficiently discounted. In the current context, the market is relatively discounted, investors who sell stocks will almost immediately return to the market.", Mr. Nguyen The Minh said.
Looking at the domestic context, Mr. Huy said that many bright economic spots and instabilities are gradually passing, while macro data still shows a positive and stable economic recovery. Regardless of psychology and short-term cash flow, a stable economic recovery is always an important foundation for the market.
Source: CafeF
