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The performance of the Vietnam stock market in the past two years has allowed investors to unlock a roller coaster-like exciting experience.
2021, the Vietnamese stock market rose sharply. After VN-Index returned to the 1200 point mark, it rushed to a new high of 1500 amidst a burst of exclamations, setting a new record for the Vietnamese stock market. Looking around the world, this increase can be said to be impressive.
Investors who view stock market information Picture source: Hoàng Triều
But since January 2022, the Vietnam stock market has obviously been a little unstoppable.
From January to early May 2022, the Vietnamese stock market took a sharp turn for the worse, causing panic among local investors. Especially with the accumulation of VN-Index falling by 21.06%, ranking among the top ten markets in the world with the largest declines. Whether professional investors or individual retail investors have begun to plan to withdraw funds from the stock market and move to safer investment channels to maintain value.
is actually only one year apart, so why is there such a gap? Faced with abnormally performing secondary markets, what policies will local regulatory agencies introduce to deal with it?
01 The market value evaporated by US$58 billion. Analysis of the causes of the sharp drop in Vietnamese stock market
At the close of May 17, Vietnam's VN-Index rose 4.81% on the day to 1228.37 points; VN30 rose 5.31% on the day to 1279.55 points. Among them, the rise in securities, real estate, oil, fishery and steel sectors were very prominent.
On this day, Vietnam became one of the largest stock markets in the world, surpassing the markets such as Hong Kong (3%) and Thailand (1%) on that day.
Picture source: Lợi Hoàng tổng hợp.
But the big rise this day is mainly compared with the sharp drop in the previous month, which makes it particularly precious.
According to statistics from Vietnamese media, in the month before this (April 14-May 13), the Vietnamese stock market fell 19.93%, becoming one of the largest markets in the world during this period.
Since reaching a new high of 1522.9 points on April 6, VN-Index has fallen by 340.13 points, causing the entire Ho Chi Minh City Stock Exchange to drop from a market value of US$58 billion, which is equivalent to the cost of building 12 Longcheng International Airports.
The entire investment community is analyzing the reason for the Vietnamese stock market plunge:
Panic (FOMO, Fear of missing out)
From the end of 2021 to the beginning of 2022, with an abnormal fanaticism in the secondary market, both domestic and foreign, institutional or individual investors in Vietnam are rushing to spend money into the stock market. Even many stock market novices who have no investment experience have followed suit to some popular stocks, fearing that they will miss the last bus of the stock market surge again, just like in the past few years.
Picture source: Lợi Hoàng.
From the changes in the number of newly opened securities accounts, it can be seen that the number of individual investors entering the market has increased sharply, from tens of thousands of newly joined accounts every month to more than 200,000 shareholders entering the market every month. From institutional games to now retail investors gathering, when retail investors pour in due to good market conditions, they will inevitably raise market prices.
But there will always be a day when the bubble bursts. As the stock trading boom cooled down, many of the money that made a lot of money in the early stage began to cash out, and even the management of many well-known Vietnamese companies was arrested for suspected market manipulation. Rumors are flying around in the market, panic begins to spread, and everyone is worried: If you don’t run, it will be too late?
herd effect appeared, and investors who once flocked in frantically began to sell their stocks, triggering a new round of plunge.
related events, welcome to review:
Source: Lợi Hoàng.
Optimism for the prospects of various companies, confidence in Vietnam's economic growth... When investors get up, they enter the Vietnam Index Fund with a large amount of securities trading margin, plus leverage , borrow money to buy funds, and realize their ambition to make big profits with small profits. However, as the market trend of the main Vietnamese index VN30 loses control and fails to receive the expected returns, the funds in hand are also difficult to turn over. Many retail investors even have their securities accounts taken away by securities companies for sale. The trading enthusiasm of the entire secondary market is like a head of ice water.
02 Regulatory measures are tightened, the CSRC takes action to stabilize the market
Seeing the Vietnamese stock market becoming more and more chaotic, the Vietnam Securities Commission could no longer sit still and quickly convened Vietnam's two major stock exchanges, custody centers and 23 securities companies to hold a meeting to come up with a solution.
(1) Disclosure of securities companies' proprietary business
as one of the short-term solutions, the Securities Commission will entrust Hanoi Stock Exchange and Ho Chi Minh City Stock Exchange to require listed companies to disclose information in a timely manner when signs of abnormal rise and fall. Major securities companies in the market must also disclose information in a timely manner.
This is because securities companies can integrate accounts, give investors advice, and invest in the stock market. In the eyes of individual Vietnamese investors, it is tantamount to the role of "playing cards and collecting money", so securities companies are required to disclose their own activities.
Picture source: Việt Linh
(2) Change the calculation method of derivative securities prices
Vietnam Securities Commission approved the new settlement rules of Settlement Center . One of the key points is to adjust the calculation method of VN30 futures settlement prices. It will no longer be calculated based on the VN30 index value in the closing matchmaking period as before, but will be calculated based on the average of VN30 arithmetic values in the last 30 minutes (minus 3 highest and 3 lowest quotes).
It took 11 years to rise back to the 1200 point mark in Vietnam, which took another 4 years to hit a new high of 1500. Faced with the plunge after the peak, the local CSRC also used short-term adjustment plans and cooperated with medium- and long-term regulatory measures to strive to ensure the market continues to develop transparently and healthily.
