The trading session on March 9 marked the strongest drop in the history of the Vietnamese stock market. Widespread selling pressure caused hundreds of stocks to hit the floor.
At the close of the session, the VN-Index evaporated 115 points, equivalent to a decrease of 6.51%, retreating to the 1,653 point zone. Liquidity on HoSE was quite high with a matched order value of about 38.170 billion VND.
VN-Index fell sharply due to concerns about energy security as well as high inflation due to the impact of military conflict in the Middle East. Some experts predict that VN-Index will only be able to form a hard bottom when Iran and the US find common ground, or at least when the market begins to see expectations for a negotiation process.
In that context, with risks that are difficult to predict the ending time such as tensions in the Middle East, the group that suffers the most is investors holding high proportions of stocks. The reason is that many stocks are no longer liquid, or if liquidity returns in the next 1-2 sessions, the discount level is already very deep, leading to a psychology of fear of selling at the bottom.
There is also a variable that worries many investors, not only in geopolitical developments, but also in the risk of call margins increasing in the short term.
According to analysis by VNDirect Securities Company, oil prices - after a sudden increase from ~77 to over 110 USD/barrel - will need to find a new balance zone in the near future. In the base scenario, one-way fluctuations with such a large amplitude are often difficult to maintain for long, and when oil prices begin to form accumulation zones, selling pressure on the stock market will cool down accordingly.
In addition, the G7 Finance Ministers are expected to hold an emergency meeting to discuss a plan to coordinate the discharge of strategic oil reserves through the IEA mechanism, with a proposed scale of about 300-400 million barrels - if implemented, this will be a significant factor to support cooling down oil prices.
However, it should be noted that in the event that the conflict continues to expand or the Hormuz Strait is interrupted for a long time, the scenario of oil prices maintaining above $100 or continuing to increase is still completely feasible.
Technically, VNDirect believes that the market is currently moving around 3 key support levels: 1,660 - 1,600 - 1,500 points. In which, the 1,500 zone is crucial - if it is broken, the medium-term uptrend of the market will be officially broken. However, it is necessary to recognize that the valuation level below 1,660 points is becoming significantly more attractive. In other words, the market is decreasing due to psychology, but the value base is gradually leaning towards buyers.
In the base scenario, VNDirect forecasts that VN-Index may adjust further to the mid-range of 1,500 - 1,600 points, where the combination of attractive valuation levels and expectations of stable oil prices will create a basis for demand to support the index. From there, the market has a basis to find technical recovery momentum.
The current developments make many investors begin to question whether this is an opportunity to "bottom-fish" cheap stocks, while many people are still cautious about the risk that the market may continue to adjust in the coming sessions.
Answering this question depends on the strategy of each investor. For investors who follow the value school and have a long-term vision, a period of sharp market decline may open up buying opportunities.
However, for short-term investors, bottom-fishing is potentially risky, because the market has only decreased sharply in one session and may continue to adjust for another 1-2 sessions. Because deep declines can lead to chain reactions when more and more investors are forced to sell to handle margin loans, causing selling pressure to continue to increase in the coming sessions.
