Before entering today's trading session (November 10), analysts all had a negative assessment of the market after the VN-Index officially lost the important support level of 1,600 points last weekend.
And the reality was as predicted when the index continued to decline in the red throughout the morning session. Entering the afternoon session, the VN-Index showed signs of improvement when many stocks with large capitalization received bottom-fishing cash flow.
However, the efforts to green the market could not be maintained until the end of the session when this cash flow was quickly "dug up" by cheap supply. Supply pressure caused the VN-Index to decline, even falling further when many investors sold strongly. At the end of the trading session, the VN-Index decreased by nearly 19 points, equivalent to 1.16%, to 1,580 points.
The strongest impact on today's index was VHM shares (down 5.5%). Next are the codes FPT, CTG, VCB, GAS, GEE, VRE, LPB, VIC, GEX. On the contrary, VN-Index received the most support from HPG and TCB codes.
Liquidity on the HoSE exchange in today's session continued to be low with nearly 730 million shares transferred, equivalent to a trading value of VND 21,200 billion. After a series of 3 previous strong net selling sessions, today foreign investors only net sold more than 180 billion VND on the HoSE.
Investors believe that the investor's mentality is currently more towards preserving profits than opening 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 a newly published report, SGI Capital pointed out that domestic capital flows in the past month were no longer strong as they had to "rely" on absorbing selling pressure from foreign investors and also contribute to large IPO deals as well as buying newly issued stocks. The current trading value is reduced by half compared to the August liquidity peak, reflecting declining purchasing power while margin continues to increase to a new peak, showing great confidence of domestic investors in the uptrend.
"The margin volume increased dramatically in the third quarter to double the 2022 peak while the VN-Index and capitalization increased by only 10-20%. Record-high margin loans in the trend of increasing interest rates at non-cheap valuations are a combination of many risks," said experts from SGI Capital.
In addition, the recent increase in deposit and lending interest rates has begun to affect both cash flow and domestic sentiment, causing demand to decrease, putting strong pressure on interest rate- sensitive stocks such as banks, securities and real estate.
After the recent decline to below 1,600, SGI Capital believes that market valuation is no longer in the expensive zone, mainly thanks to the valuation of the banking group having decreased to trung tam, partly reflecting the difficulties the banking industry will face.
However, the non-financial group is still anchored at high valuations, especially the group of stocks of large private corporations that have increased far beyond the reasonable valuation and attractive correlation of stocks no longer. Reversal
According to SGI Capital, the "cheap money" cycle that has lasted from May 2023 to now is reaching its final limits. Many signals are showing that liquidity is decreasing and the interest rate level will have to increase in the coming time. The stock market in the short term is always most affected by interest rate trends.
The number of newly opened accounts, liquidity and the record increase in margin in recent times are the consequences of a long-term low interest rate environment and many beliefs and expectations for ambitious economic growth prospects.
Like previous cycles, many individuals and businesses will have used different sources of loans and short-term money to buy stocks as well as other assets in the past and only revealed and forced to sell when the market has strong fluctuations.
