The Red-Hot Market Fizzles: Capital Retreats, Liquidity Plunges


A sudden spike in profit-taking pressure during this morning’s session, coupled with weak capital inflows, sent stock prices tumbling. Unlike yesterday’s erratic volatility, today’s selling pressure built gradually but steadily, exerting force until the closing bell. The VN-Index shed 8.63 points (-0.69%), settling at the day’s low.

Surprisingly, HoSE’s matched-order trading liquidity dropped by 29% compared to yesterday’s morning session, reaching approximately VND 6,142 billion. The VN30 basket witnessed a 24% decline in trading volume, amounting to VND 2,392 billion. Meanwhile, the market breadth was extremely narrow, with 98 gainers and 324 losers on this exchange, and every stock in the VN30 basket painted the screen red.

The abysmal liquidity, coupled with a dominant selling force, indicates issues on the demand side. Capital has retreated to lower price levels, compelling buyers to abandon their previous selling price zones. Moreover, as more investors seek short-term profit-taking, the only way to find sufficient liquidity is to lower selling prices.

Currently, HoSE records 116 stocks declining by more than 1% against the reference price, with a liquidity concentration of about 37.2% of the exchange’s total matched transactions. However, only a few stocks witnessed exceptionally high liquidity: MWG fell by 2.21% with a trading value of VND 265.4 billion, HPG decreased by 1.31% with VND 184.1 billion, PDR dropped by 6.7% with VND 137 billion, and DGC slid by 1.04% with VND 127.1 billion. HDB, VCI, VJC, VRE, KBC, HAG, and PVD also witnessed relatively significant declines, but their liquidity remained modest due to a price retreat rather than excessive selling.

On the flip side, the number of stocks that managed to swim against the downward tide this morning was scarce, both in terms of quantity and liquidity. Most of the gainers maintained their upward momentum thanks to sporadic transactions. APH, CMG, AAA, TCH, ELC, DPG, YEG, VOS, and HHS were among the few stocks that climbed over 1% with liquidity in the range of several dozen billion dong.

VN-Index Intraday Chart

The abrupt retreat of buyers reflects heightened caution, even surpassing that of previous sessions. Fluctuations are customary after a series of positive sessions, signifying a tug-of-war between buyers and sellers without a clear victor. While sellers dominated the scene this morning, as evident on the scoreboard, the more critical factor is the disappearance of buying power, which warrants closer scrutiny than the reasons behind investors’ selling decisions.

Lack of demand will likely introduce instability to the ongoing uptrend. A retrospective glance at the entire upswing reveals that liquidity is significantly lower than during the downward phase and even pales compared to the previous peak in March. Investors seem content with missing out on opportunities and resolutely refrain from pouring money back into the market.

Another factor impeding the ascent is the weakening of blue-chip stocks. The VN-Index’s loss today primarily stems from declines in pillars such as VIC, down 1.76%; HPG, down 1.31%; GAS, down 1.05%; and CTG, down 0.91%. It is fortunate that the most significant pillars have not witnessed deeper declines: VCB fell by 0.43%, BID by 0.4%, and VHM by 0.49%. If these heavyweights exert further pressure, resulting in more substantial point losses, panic could ensue.

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