October 16-20 was an eventful week with unexpectedly strong sales at the end of afternoon trading sessions, which surprised investors.

On October 17, for example, the stock market saw investors rush to sell off stocks at the end of the day. The selling pressure was seen with most shares, including bluechips and mid-cap shares of Vinhomes, Vingroup and bank shares. 

The sudden drop of nearly 20 points within just 15 ATC (at the close) minutes was described as a "surprise attack" that blew away all the efforts of the stock market to rise. The VN-Index dropped to 1,122 points.

At the next trading session on October 18, the VN-Index dropped by 33 points because of the sale off of real estate shares, including shares of big players such as Vingroup (VIC), Vinhomes (VHM), Dat Xanh (DXG), Novaland (NVL) and Phat Dat (PDR), leaving investors in a cold sweat. 

On October 19, the stock market once again witnessed strong sales at the end of the session, causing the VN-Index to decrease by 15 points to 1,087.85 points.

As such, the VN-Index lost 70 points in total after the first four trading sessions last week.

Analysts noted that the market last week faced investors’ negative emotions amid pressure on the exchange rate, caused by the US government bond interest rates coming closer to 5 percent, an 18-month high.

In Vietnam, the official dong/dollar exchange rate announced by the State Bank of Vietnam (SBV) climbed to new peaks, reaching VND24,100 per dollar on October 19, and then to VND24,110 on October 20.

Meanwhile, commercial banks raised dollar prices to VND24,700 per dollar (selling price), the highest level so far, just a little lower than the record high of VND24,888 per dollar on October 25, 2022.

The dong/dollar exchange rate fluctuation was one of the major factors which triggered the sale movement, leading to sharp price falls of nearly all shares. The mortgage lien release made the decline sharper. The VN-Index dropped to below MA200 (moving average) on October 18 with the sharpest decreases reported for securities, real estate and retail stocks.

However, on the last session of the last week, October 20, bottom-fishing demand appeared at the 1,080 point area, helping the index increase by 32 points from the bottom area. Securities and real estate shares saw prices hitting the ceiling.

As such, the VN-Index dropped by 46.7 points last week, or 4 percent, despite the upward trend in the last session. The HN-Index decreased by 4.4 percent to 228.5 points, while the UpCom Index decreased by 2.6 percent to 85.6 points. 

The shares that saw prices drop sharply and had heavy impact on the market last week included Vingroup (- 6 percent), BIDV (- 4.7 percent) and Vietcombank (- 2.1 percent). By contrast, Vietjet share price increased by 1.4 percent, LPBank 2.5 percent and Eximbank 1.4 percent.

Recovery expected

Observers, after witnessing the share price increase again at the last trading session, believe that the cash flow from domestic and foreign institutions is returning.

On October 16-20, foreign investors bought more than they sold on all three bourses, totaling VND900 billion. Meanwhile, in the week before last week, their net sales reached VND1.9 trillion.

On October 20, securities companies themselves made net purchase of VND500 billion and the most wanted shares were E1VFVN30, Sacombank, Hoa Phat, Techcombank, FPT and PVS.

The emergence of the VN-Index to the 1,100 point threshold has relieved investors. This shows that 1,070 points is an important support threshold for the correction.

It is demand from institutions that helped liquidity recover slightly with the trading value of VND18.516 trillion per session, up 12.5 percent over the week before.

Dinh Quang Hinh from VnDirect thinks that the last trading session information supported the exchange rate.

When talking about the monetary policy recently, the US FED’s Jerome Powell implied that the FED may continue suspending the interest rate hike at the upcoming meeting in early November. This may restrain the upward trend in US Government bond yields.

Manh Ha