Securities investors flee pre-Tet

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A scenario is reoccurring in the stock market. Most stocks have fallen dramatically during pre-Tet days, causing widespread panic.

Securities investors flee pre-Tet

The stock market experienced a tough trading session on January 17 when the VNIndex fell sharply by 43 points to 1,452.84, far from the historical peak of over 1,500 points gained in 2021.

At the HCM City Stock Exchange (HOSE), 446 shares decreased, of which 128 shares fell to floor levels, while only 49 shares increased. At Hanoi Stock Exchange (HNX), 204 shares decreased, of which 49 fell to floor levels and only 50 shares increased.

A large number of stocks fell to floor levels and eroded the pockets of many investors amid increased selling pressure before the Lunar New Year and investors’ concerns after Trinh Van Quyet, president of FLC Group, sold 74.8 million shares without a required report, and Do Anh Dung, Chair of Tan Hoang Minh, withdrew from the Thu Thiem land auction last week.

Quyet has been fined VND1.5 billion along with a five-month ban from the stock market.

Under the current laws, those infringing stock trading rules will be fined at least VND5 million or 3-5 percent of the value of transactions worth over VND10 billion.

“All of a sudden I made a big profit early last week, but things have changed. All the shares I hold have fallen in price. Some shares have decreased by tens of percent,” said Nguyen Thi Thinh, an investor in Hanoi.

“This is unimaginable in the context of a bustling market with high expectations. Some analysts even predict that the VNIndex may climb to 1,700 points,” she added.

Like Thinh, many other investors may have a sad Tet holiday because of the sharp falls in share prices.

In fact, selling pressure before Tet has occurred before. However, after the two shocks, according to Thinh, the prospects are not bright.

“Just 10 days ago, real estate shares increased to ceiling levels in many trading sessions. Many investors hoped they would have a happy Tet holiday. But it has changed overnight. All shares have fallen to the floor prices,” an investor said.

“Shares have been bargained away and the prices have fallen down as a result of the domino effect,” he added.

At the same time last year, the stock market saw sale-off sessions with unprecedented declines. On Jan 19, 2021, the VN Index decreased by 75 points at the morning session and 58 points in the afternoon. This session also witnessed record high liquidity of over $1 billion.

The World Bank has predicted a bright outlook for Vietnam’s economy with a 5.5 percent growth rate in 2022, much higher than the 2.6 percent in 2021. Vietnams’ vaccination rate is among the highest in the world. Domestic economic activities have recovered alongside the recovery globally.

Some days later, on January 28, another decline occurred. The news about a community-transmitted Covid-19 case in Hai Duong and Quang Ninh then caused the VN Index to drop by 73.23 points, or 6.67 percent, to 1,023.94 points, the sharpest fall in history.

Vietnam’s stock market lost $15 billion in capitalization value. Meanwhile, foreign investors’ net purchase was VND575 billion.

Investors await new signals

This year’s decline has not caused a surprise as it did last year. The ‘Trinh Van Quyet’ and ‘Do Anh Dung’ shocks are believed to be the reason behind the fall. But it still surprised some investors.

The World Bank (WB) has predicted a bright outlook for Vietnam’s economy with a 5.5 percent growth rate in 2022, much higher than the 2.6 percent in 2021. Vietnams’ vaccination rate is among the highest in the world. Domestic economic activities have recovered alongside the recovery globally.

The Government has set a high goal of 6-6.5 percent in GDP growth rate in 2022. The inflation is low and is within control.

In their recent reports, many securities companies believe that selling pressure is normal now because the stock index has climbed to the top, causing profit-taking pressure to increase sharply. A correction session after the rapid increase is necessary for the market to move towards new highs in the time to come.

Some investors have recently restructured their portfolios, reducing the proportion of stocks, especially hot stocks, to preserve their profits. The demand is low as many investors stand outside and watch, while selling pressure increases.

Nguyen Duc Hieu, an investor with 20 years’ experience, said the recent hot growth needs to be followed by a correction.

“Sharp rises and sharp falls are quite normal in the stock market. The upward trend is seen with many shares as businesses can weather the storm and have good business performance. The shares will decrease in price but will bounce back later,” Hieu said.

However, the investor warned against the use of margin trading, saying that if share prices plummet as a result of inertia, investors may incur big losses.

According to a BSC (Bank for Investment and Development of Vietnam Securities Company) report, Vietnam is on the way to become the next ‘tiger’ in Asia. The VN Index is expected to increase in 2022 thanks to good news about macro platform, business and cash flow. The index may climb to 1,782 points assuming that EPS (earnings per share) grows by 16.5 percent and P/E (price to earnings) of 18.

The other good news is the sharp rise in number of new investors with 1.4 million new accounts opened in 2021. The strong cash flow into the market, plus the strong recovery of listed companies, are strong motivation for shares.

A local newspaper reported that Vietnam now has over 4.3 million retail stock accounts, or around 4.4 percent of the population.

The Saigon Securities Incorporated (SSI) VN Direct and Mirae Asset Vietnam all have predicted that the VN-Index will increase further and reach the 1,700 point threshold by year end.

V. Ha

The State Securities Commission of Vietnam (SSC) has imposed the highest possible fine of VND1.5 billion (US$65,850) on Trinh Van Quyet, chairman of local conglomerate FLC, for his unannounced sale of FLC shares.

Covid-19 posed difficulties to many people in 2021, but not to securities investors. They earned big money as the VN Index climbed to new highs.

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