The sharp decline of the VN-Index in the trading session at the end of last week was unpredictable and surprised investors somewhat. Massive selling pressure appeared, especially in pillar stocks, causing the index to fail to hold the 1,600-point mark. It is noteworthy that despite the sharp decline in the market, liquidity is still low, and transactions are gloomy when the matched value only reaches over VND23,000 billion.
At the end of the trading week, the VN-Index decreased by 40.55 points (-2.47%), down to 1,599.1 points. The total trading volume reached just over 4 billion units, narrowing compared to the previous week, reflecting investors' cautious sentiment in the short term. Thus, all the increase results of the past three months have been "inflated", bringing the VN-Index to the lowest level since the beginning of August. Since the peak of the index, more than 160 points have been lost.
Explaining this sharp decline, analysts from Yuanta Vietnam Securities Company said that there are many reasons for the same impact. Firstly, profit-taking pressure has increased significantly after a period of strong increase.
In addition, the sharp decline in the US stock market also affected the sentiment of domestic investors, in the context of weakening cash flow in the market. In recent sessions, continuous liquidity at low levels reflects investors' caution in the face of a series of variables.
Investors are currently more inclined to preserve profits than open new positions. In that context, just a small negative signal is enough to trigger a strong sell wave, especially when pillar stocks fall sharply, causing a spillover effect throughout the market. The pressure of call margin appeared at the end of the session, further reducing the momentum.
In addition, margin's outstanding loans are currently estimated at about VND370,000 billion, a record high, which also contributes to putting pressure on the market during the adjustments. In fact, margin leverage is a tool that is likened to a 'double-edged sword', which can help increase profits, but also puts investors at increased risk in strong corrections.
In addition, net selling activities of foreign investors have not shown any signs of stopping, continuing to put pressure on domestic investors. After a short net buying session, foreign investors quickly returned to a state of net selling thousands of billions of VND, focusing on large-cap stocks, contributing to the further decline.
According to statistics last week, trading from November 3-7 across the whole market, foreign investors have net sold more than 93.2 million units, with a total net selling value of VND 2,543.9 billion, down 45.8% in volume and 17.2% in value compared to the previous week ( net selling VND 3,072.2 billion).
On the HOSE floor, foreign investors net bought the most FPT shares with a value of VND592.7 billion, equivalent to a net purchase volume of more than 5.4 million units. On the contrary, this group sold strongly in bank stocks, in which STB led with a net selling volume of 14.6 million units, the corresponding net selling value reached 756.8 billion VND. Next were HDB with a net selling of 14.14 million units, with a net selling value of VND 425.9 billion and MBB with a net selling of VND 11.95 million, with a value of VND 283.3 billion.
The market is also entering the "IT dong" stage. Supporting factors such as positive Q3 business results, market upgrade expectations or the possibility of the US Federal Reserve (FED) lowering interest rates have all been largely reflected in stock prices, contributing to activating the profit-taking wave of smart cash flow.
With the VN-Index breaking through the 1,600-point threshold, many experts believe that the index can retreat to the 1,525-point area to regain balance.
The 1,600-1,610 zone is an important support zone. If this zone cannot be maintained, the risk of a downtrend will increase and the market may enter a deep correction phase.
The market is entering a high-risk zone, but the bright spot is that the valuation level is becoming more attractive, especially in the group of banking stocks that are expected to soon stabilize and stop falling.
Experts recommend that investors should bring the margin ratio to a safe level, limit the use of high leverage during the volatility period. For investors using their own capital, they should not sell off in panic, instead, they should observe more stable signals of the market before taking action.
