Stock market plummets, $10 billion lost

The Vietnamese stock market saw an unprecedented plunge on January 19. But panic did not occur.

Stock market plummets, $10 billion lost

The Vietnamese stock market saw an unprecedented plunge on January 19

Nearly all shares at the HCM City Stock Exchange (HOSE), Hanoi Stock Exchange (HNX) and UpCom saw the prices falling by 5-7 percent by January 19 morning closing session.

The VN Index lost 75 points, or 6.3 percent, while HNX Index also decreased.

The decreases were milder at the afternoon session, but still unprecedented in history. The VN Index at the end of the day dropped by 60.94 points to 1,134 points, HNX Index by 6.48 points to 224.02 points, and UpCom Index by 2.4 points to 76.15 points.

As such, the capitalization value in the entire market decreased by $9-10 billion.

Huynh Minh Tuan from Mirae Asset commented that the decline was unavoidable after a long period of a sharp increase from a low of 645 points in March 2020 to nearly 1,200 points in recent sessions.

According to Tuan, many securities companies predicted a 3-4 percent decrease for some trading sessions. But the 6 percent decrease on January 19 morning was beyond prediction.

The market plummeted, according to Tuan, because of convergence. There are many new investors and they follow the crowd when making investments. This is why the situation went from good to bad.

A report shows that the number of new investors of the last year was equal to the number of investors in the last 10 years combined. In 2010, securities companies had 1.5 million accounts and in early 2020 had 2.2 million, which meant the number of accounts increased by 700,000 within 10 years.

Meanwhile, just within 2020, the number of accounts rose by 600,000.

Le Quang Tri from Tri Viet Securities commented that despite the sharp decline investors are not in a panic.

The common characteristic of the latest plunge and the ones in the past is that investors rushed to sell shares.

However, as investors had made big profits before, 35-40 percent, it was not a problem to sell at the floor price and accept a price fall of 5-7 percent.

In fact, this was a mass profit-taking phenomenon, not stop-loss as seen in the previous sale-off campaigns.

Positive prospects

 
The stable macroeconomy is the fundamental factor for the recovery and strong rise of the stock market. There are many ‘bright spots’ in the economy, including high export growth rate, record high trade surplus and curbed inflation.

Tuan attributed the sale-off to convergence in psychology in front of the important 1,200 point resistance threshold and the accumulated margin. The 1,200 point threshold has become a firm resistance threshold three times.

According to a group of securities investment experts in HCM City, the sale-off session is the result of the convergence of psychological effects, which shifts from profit taking to exiting the market at all costs.

This should be seen as a session where investors wanted to relieve the accumulated market pressure.

Tri believes that the market decreased because of the profit-taking pressure. The market may see continuous decreases in the next few trading sessions.

However, market prospects are still positive and the share prices may see a new increase wave after April 30, after listed companies organize their shareholders’ meetings and release yearly business plans.

Prior to that, many securities companies predicted that the market would decrease in Q1 before increasing again in Q2, when businesses set new plans for the new year.

The Vietnamese stock market is predicted to continue rising in 2021 on positive economic prospects and predicted GDP growth rate of 6-6.8 percent.

Vietnam’s stocks can enjoy benefits from the cheap-money cycle when the deposit interest rates decrease. As the deposit interest rates are low, money flows into the stock market.

The good performance of many large corporations amid the pandemic also serves as a ‘pedestal’ for stock prices.

The stable macroeconomy is the fundamental factor for the recovery and strong rise of the stock market. There are many ‘bright spots’ in the economy, including high export growth rate, record high trade surplus and curbed inflation.

The government of Vietnam is applying measures for an economic recovery, such as promoting public investment, improving capital efficiency, and expanding global integration with many FTAs signed, including EVFTA and RCEP.

Some analysts believe the VN Index will climb to a new record high in 2021. This is not a far-away goal, if noting that some stock markets in the world, including the US, have reached peaks, while Vietnam still has not exceeded the old peak though it bears less impact from the pandemic. 

V. Ha

Stock market 2021: Positives and risks

Stock market 2021: Positives and risks

The stock market ended 2020 with diverse notes, from the selloff in Q1 which sent the VN-Index down to 660 points, the lowest in four years, to the recovery and strong rally, especially in Q4.

New entity to invigorate Vietnam’s stock markets

New entity to invigorate Vietnam’s stock markets

With general optimism well-founded for Vietnam’s stock market building in the past year, there is now significant anticipation for 2021 with the arrival of a new entity to run the country’s exchanges.

 
 

Other News

.
MIC outlines plan on preparing human resources for national digital transformation
MIC outlines plan on preparing human resources for national digital transformation
FEATUREicon  30/01/2021 

The Ministry of Information and Communications (MIC) is building a plan to develop digital human resources for national digital transformation.

Digital transformation opens up new development space
Digital transformation opens up new development space
FEATUREicon  29/01/2021 

"Like exploring new lands, the expanded cyberspace will open up a new development space for the country,” Minister of Information and Communications Nguyen Manh Hung said at the 13th National Party Congress on Thursday morning (January 28).

Vietnamese-made games now played around the world
Vietnamese-made games now played around the world
FEATUREicon  31/01/2021 

To create a level playing field and help Vietnamese develop games reach the world market, it is necessary to have more reasonable policies, experts say.

Education Minister outlines 9 achievements, 5 problems in educational sector
Education Minister outlines 9 achievements, 5 problems in educational sector
FEATUREicon  28/01/2021 

After seven years of implementing Resolution 29 on reforming the education and training sector, Vietnam has gained several outstanding achievements.

Vietnam stands at turning point to recover and make a breakthrough
Vietnam stands at turning point to recover and make a breakthrough
FEATUREicon  29/01/2021 

The 13th National Party Congress is taking place in the context of unpredictable changes in the world, as the Covid-19 pandemic is dividing many countries, the global economy is experiencing negative growth and ongoing trade and economic conflicts.

13th National Party Congress: Hanoi, HCM City aim for digital government
13th National Party Congress: Hanoi, HCM City aim for digital government
FEATUREicon  28/01/2021 

Hanoi and Ho Chi Minh City both plan to develop synchronous, inter-connected digital, IT, and data infrastructure, creating a foundation for digital economic and social development.

UNESCO expert: Vietnam education reform on right path, recommends better allocation of funds
UNESCO expert: Vietnam education reform on right path, recommends better allocation of funds
FEATUREicon  28/01/2021 

Dominique Altner, Senior Program Specialist at IIEP (International Institute for Educational Planning), spoke to VietnamNet about the development of Vietnam’s education system in the last five years.

Two resolutions for reform
Two resolutions for reform
FEATUREicon  28/01/2021 

The Government has issued Resolutions 01 and 02, showing the spirit of reform and steadfast effort over the years to remove barriers in the business environment, helping people and businesses to thrive.

Digital transformation to contribute 25% of HCM City's GRDP by 2025
Digital transformation to contribute 25% of HCM City's GRDP by 2025
FEATUREicon  27/01/2021 

By 2025, digital transformation will contribute 25% of HCM City's gross regional domestic product (GRDP), said Chairman of HCM City People's Committee Nguyen Thanh Phong.

Wind, solar power sees new boom
Wind, solar power sees new boom
FEATUREicon  27/01/2021 

Many wind and solar power projects are awaiting approval to be added to the list of projects to be developed under the national power development plan.

After 30-year boom, motorbike market sees decline in sales
After 30-year boom, motorbike market sees decline in sales
FEATUREicon  31/01/2021 

The sales of motorbikes decreased sharply in 2020. After 30 years of continued growth, the motorbike market has become saturated.

Vietnam shows its 'firm stuff' after five years of difficulties
Vietnam shows its 'firm stuff' after five years of difficulties
FEATUREicon  26/01/2021 

The US-China trade war, Brexit, the US withdrawal from TPP, Covid-19 and internal difficulties all have affected Vietnam’s economy in the last five years.

Long-term development commitments realised through strategic M&A moves
Long-term development commitments realised through strategic M&A moves
FEATUREicon  25/01/2021 

A potential rise in mergers and acquisitions is sparking concerns that local firms will lose competitiveness by selling themselves to foreign investors.

Reshuffle underway to further stimulate revival of economy
Reshuffle underway to further stimulate revival of economy
FEATUREicon  23/01/2021 

The 13th National Party Congress is expected to set the country’s average annual growth rate of 6.5-7 per cent from now until 2025, when Vietnam may become a higher middle-income nation. 

Tech giants building on ICT potential
Tech giants building on ICT potential
FEATUREicon  23/01/2021 

Vietnam’s ICT market is expected to see a big 5G race in 2021 as international tech giants look to boost partnerships with local telcos to gain more advantages, driven by strong performances in Vietnam in 2020.

American corporations relocate to Vietnam as costs rise in other locations
American corporations relocate to Vietnam as costs rise in other locations
FEATUREicon  26/01/2021 

Vietnam has recently received many large global groups, led by US technology firms, that have brought production chains with capital of up to billions of dollars.

Real estate bond interest rates are too high, say experts
Real estate bond interest rates are too high, say experts
FEATUREicon  25/01/2021 

The HCM City Real Estate Association (HOREA), in its report about the real estate market in 2020 and prospects in 2021, says the real estate bond market will continue to grow well this year.

Vietnamese engineer works on vaccine patch, high-tech face mask
Vietnamese engineer works on vaccine patch, high-tech face mask
FEATUREicon  23/01/2021 

After inventing a biological mask with outstanding features, Dr Nguyen Duc Thanh, winner of many prestigious awards, and his co-workers are working on vaccine patches.

Flower villages still waiting for Tet buyers
Flower villages still waiting for Tet buyers
FEATUREicon  22/01/2021 

Farmers in flower villages in HCM City are worried as merchants have not contacted them yet for Tet sale season.

Ministry of Natural Resources and Environment announces top 10 events
Ministry of Natural Resources and Environment announces top 10 events
FEATUREicon  21/01/2021 

Minister of Natural Resources and Environment Tran Hong Ha has signed a decision announcing the top 10 events of the sector last year. Below are the selected events.

 
 
 
Leave your comment on an article

OR QUICK LOGIN