. The Vietnamese stock market suddenly collapsed on January 19, and the VNIndex index fell by nearly 61 points at one point and closed at 1131 points. This is the biggest drop in the Vietnamese stock market since its establishment for more than 20 years.
Vietnamese media reports on the decline of Vietnam's stock market Picture source: China and Vietnamese
According to statistics, Vietnam's VN-Index plummeted by more than 75 points in the early trading; by midday trading, the decline tended to narrow, but it was still very large. On that day, 44 stocks rose in Vietnam, 437 stocks fell, 98 stocks hit the limit, and market-led sectors such as banks, securities, and oil all fell sharply. Among them, the stocks of Industrial and Commercial Bank of China (CTG), Investment and Development Bank (BID) fell 7%, securities companies SSI and HCM fell 6.9%, and insurance companies PVI fell 9.9%, etc.
Mirae Asset Securities (Vietnam) Investment Analysis Director Li Guangming analyzed the reasons and pointed out that the main reason for the Vietnamese stock market plunge on the 19th is mainly because new individual investors are worried about the early holiday of the Spring Festival and the new crown epidemic broke out again. Starting last week, individual investors began selling stocks, with net selling of more than 1 trillion VND . This trend is expected to continue this week.
Since 2020, the Vietnamese government's continuous increase in economic revitalization measures and the loose monetary policy of have become one of the factors that led to the rise of Vietnam's stock market. Under loose conditions, Vietnamese retail investors have taken advantage of the low level to enter the market. According to data from Vietnam Securities Co., Ltd. (VSD), from June to September 2020 alone, more than 137,000 new securities accounts applied for more than 137,000, accounting for 73% of the number of newly opened accounts in 2019, and most of them were personal accounts.
Vietnam stock market Source: China and Vietnam
Although foreign investors continued to sell stocks during this period, as new domestic investors in Vietnam, especially retail investors, continue to flock to the market, this has brought huge incremental funds to the market. According to relevant statistics, the Vietnam index is close to 1,200 points, and the profit-taking selling pressure has increased. In addition, investors' willingness to raise funds at high levels has been reduced and risk avoidance.
Therefore, with the arrival of the Spring Festival holiday and the market's continuous surge in the market, the selling pressure of individual investors in Vietnam may continue until the Lunar New Year. Compared with 1200 points, the reduction can be as high as 10%~15%.
Vietnam VN30 Index Component Stock Picture Source: China Vietnam Gaming
Another securities company's investment advisory director believes that in the context of the short-term market surge and the recent small number of margin loans for securities companies, a strong market decline is necessary to create sustained market momentum.
Li Guangming also believes that the sharp growth of Vietnam's stock market in recent years is not worrying. Since VNIndex's P/E valuation has not yet reached its all-time high, it is still quite cheap compared to many regional markets. Therefore, now is not the time for stock "bubble" to appear. In addition to stock price-to-earnings valuations, there are still many factors that support the growth of the stock market.
He also expects that the growth potential of Vietnamese companies will continue to grow, especially when companies release their fourth-quarter results report, corporate profit margins will prompt P/E to lower again and the valuations of companies will become more attractive. Strong stock selling among investors will help relieve pressure on securities companies on margin. In the near future, Vietnam will have more capital inflows and the market will be difficult to see a sharp decline.
Source: Vietnam News Service, China Yuejia, NetEase News
Editor: Qin Lei
