Putting an end to the 15-month rally, the Vietnam stock market suffered a shock drop in the opening session of the week. A wave of selling pressure hit most stock groups, with large-cap stocks being the focus, causing the VN-Index to lose over 40 points in the late morning session.
The unusual movement of the index in the morning session made many investors panic and search for reasons, but stability helped slow down the selling pressure in the afternoon session. The VN-Index had a dramatic drop to close at 1,243 points on March 18, down 20.22 points (-1.6%).
Notably, the highly active trading pushed market liquidity to skyrocket with a trading volume exceeding 1.7 billion shares. Specifically, the total trading value on HOSE reached nearly VND 40.3 trillion (equivalent to nearly USD 1.6 billion), setting the highest matching session of the index in over 2 years, since 2021. Foreign trading was also not positive as they net sold nearly VND 1 trillion on HoSE.
Discussing the market situation, Mr. Ngo Minh Duc, Director of LCTV Investment JSC, said that there were several converging factors that caused the market to fluctuate sharply in the opening session of the week.
In general, it is not difficult to understand the profit-taking pressure as the market had a long rally before without any significant correction. In addition, the VN-Index repeatedly failed at the previous peak zone of strong resistance at 1,250-1,280, while leading stocks in the banking sector lost their strength, making the index lack support.
Meanwhile, macro factors have not had positive developments such as this morning’s exchange rate increase compared to Friday, SBV still issuing bills, the FED meeting this week, and March 21 is the derivative expiry date.
Large capital has sold off and not yet returned, so the support is weak, leading to some stocks being sold off and the sentiment spreading to other sectors.
However, experts believe that money is still flowing into many stocks, with DIG and VRE being the focus, stabilizing the market sentiment and experiencing a strong rebound at the end of the session.
“The market has shown clear signs of short-term distribution when liquidity surged during a sharp drop session. However, I believe that the correction is necessary when the market has had a strong rally from the bottom and the downward trend will be short-term. As for how far the market will fall, we need to monitor the developments in the next few sessions,” said Mr. Ngo Minh Duc.
However, the expert believes that the market has started to diverge, investor sentiment is shaken, and foreign capital is still strongly withdrawing, so when the market confirms the break of 1,250, there will be a 2-3 week correction to rebalance.
In terms of strategy at this time, the expert recommends that investors avoid trying to bottom fish. Bottom fishing always carries a high risk, so investors should not take the risk and wait for the market to confirm a clear bottom. In particular, the current margin situation is also quite high as investors excitedly bought in the past few sessions. Therefore, the expert recommends investors reduce margin, maintain 40-50% selling when prices rise.
As for himself, Mr. Bui Van Huy – Director of Ho Chi Minh City Branch of DSC Securities Company – said that there have not been any significant risks yet, but the market is gradually seeing more negative factors. Moreover, the Fed’s meeting on March 20-21 this year will have a very significant impact on asset markets.
“In the coming sessions, if the VN-Index closes below 1,235-1,249 points, the possibility of breaking below 1,200 points to 1,180 points is very high. Therefore, investors need to observe the market’s next reaction to make appropriate decisions,” said the DSC expert.
