The Fickle Flow of Funds: Liquidity Plunges to Six-Month Low, Sending Stocks Tumbling

Investors’ steadfast refusal to buy at high prices this morning caused stock prices to gradually weaken. The VN-Index only managed a few minutes above the reference price and closed the morning session at its lowest level, down 4.21 points (-0.33%). Matching trading volume on the HoSE fell by 28% compared to yesterday’s morning session.

The index remains above the 1250-point threshold, but trading momentum is lackluster. Conversely, demand for green prices is almost non-existent, and throughout the session, the number of declining stocks far outweighed those that gained. Currently, the breadth stands at 128 gainers/244 losers, with nearly 100 stocks falling by over 1%.

This adjustment range is quite significant, and given the extremely poor liquidity, the sole reason is the lack of buying support. The blue-chip group also dried up in liquidity, with trading volume down 27% to just over 2,361 billion VND. The VN30-Index closed the morning session down 0.59% with 11 gainers and 18 losers.

Fortunately, the main stocks only underwent minor adjustments. VCB rose 0.23%, BID gained 0.11%, GAS increased by 0.39%, and GVR went up by 0.28%, making them the only four stocks in the top 10 market cap that posted gains. Among the losers, VPB fell by 1.32% and TCB dropped by 2.71%, while the other four stocks did not experience significant adjustments. In fact, the VN30 basket also included six stocks that fell by over 1%, but apart from VPB and TCB, they were all medium-cap stocks: SSB down 3.31%, POW falling 2.61%, and PLX decreasing by 1.53%.

The weak tug-of-war among the main stocks somehow still provided support to the VN-Index. This index fell by 0.33% this morning and retreated to 1,257.03 points, still above the psychological support level of 1,250 points. However, similar to yesterday’s pullback session, the problem lies with the main stocks. Just a small amount of selling pressure from these large-cap stocks, in the context of extremely low liquidity like now, can cause significant price fluctuations. For example, the buy and sell orders for VCB, BID, and GVR are all very thin.

Mid and small-cap stocks also failed to go against the flow in such a weak market. 52 out of 138 stocks rising by more than 1% account for only 14% of the total matching value on the HoSE. Less than a third of these stocks achieved liquidity of over 10 billion VND. DCM rose 1.49% with a trading value of 132.9 billion VND; HDB increased by 1.32% to 130.4 billion VND; BVH gained 4.36% to 80.6 billion VND; and MSB went up by 1.4% to 58.5 billion VND, making them the most notable stocks.

Naturally, declining stocks dominate, with the Midcap index losing 0.7% and the Smallcap index falling by 0.44%. 99 stocks falling by over 1% account for approximately 29% of the total trading volume on the HoSE, and the selling pressure is concentrated on blue-chips such as TCB, POW, VPB, HSG, DGC, HAH, VND, and ACB.

Overall, the extremely low trading volume this morning is not a cause for concern, as a wait-and-see attitude is normal. Investors are reluctant to buy in strongly and even more reluctant to chase prices, hence the low liquidity during upward movements. Passive buying with orders placed at low prices does not create liquidity, and only the sellers can determine whether the trading volume will be large or small.

From this perspective, low liquidity is also an indication of a lack of significant selling pressure. Yesterday’s session saw a large number of bottom-fishing stocks entering accounts, but prices were still pulled up. However, this remains a constant pressure, and many T3 stocks still made small gains this morning. The index did not fall much thanks to the main stocks, but individual stocks will face varying degrees of pressure as investors are a diverse crowd with opposing views on short-term profits and current risks.