The VN-Index, Vietnam's benchmark stock index, closed at 1,493 points on 29/7, down 64 points or 4.1%. Yesterday, the index hit a record high of 1,557 points.

Across all 3 exchanges, 666 stocks declined, including all VN30 stocks—the largest and most liquid companies on the market. However, trading volume reached a new record of over 76,000 billion VND (approximately 3 billion USD).

Experts said the steep decline today was not unexpected, as it was a necessary correction after the recent rapid gains.

Tran Quoc Toan, director of branch 2 at Mirae Asset Securities JSC, told VnExpress that a short-term correction was anticipated after the VN-Index rose 181 points in less than a month.

Toan explained that the market declined from the morning, but heavy selling emerged in the early afternoon. “Market liquidity after 2 PM surged by 20,000 billion VND in just 30 minutes. This is a sign of investor panic,” Nguyen Manh Dung, senior director of market strategy research at HSC, said. However, Dung said that profit-taking by investors is understandable.

The stock market experienced a sharp decline on 29/7. Photo: Trong Hieu.

The stock market experienced a sharp decline on 29/7. Photo: Trong Hieu.

Sharing the same view, Nguyen Thanh Trung, CEO of investment advisory and management firm FinSuccess, said this was a positive correction after the market had risen 300 points since early April. “Today's session recorded a near-record liquidity of nearly 72,000 billion VND. More than 2.79 billion shares were sold, meaning a similar amount was bought by investors,” Trung said.

Dung added that one of the largest brokerage firms focusing on individual clients has reduced margin lending, which negatively impacted the market. He also shared that the market is no longer as attractive after the rapid increase, although there is still room for long-term growth.

Analysts suggest that this decline may continue in the short term. Dung said this decline presents an attractive accumulation opportunity for many investors who missed the recent rally. However, from a technical perspective, short-term risks remain as the correction from the peak in previous positive market cycles can range from 5% to 15%.

Sai Gon - Ha Noi Securities JSC (SHS) believes that with these developments, the VN30 index may face pressure to retest its 2021 highs, corresponding to 1,560-1,590 points, while the VN-Index will find support around 1,450 points.

Thanh Cong Securities JSC (TCSC) analysis team stated that after the 64-point drop, the VN-Index has fallen below 1,500 points. In such situations, investors often find it difficult to predict the market, so their typical reaction is to reduce their holdings to preserve profits.

TCSC predicts that the market may continue to decline on the morning of 30/7 due to inertia. Therefore, investors need to observe the absorption capacity at this level in case of a deeper correction. According to TCSC's observation, the market typically takes 2-3 weeks to recover after corrections exceeding 3% during an uptrend.

Given this context, Trung advises investors with large stock holdings to review their portfolios. “If a portfolio holds many high-risk stocks that have declined more than the general market, investors should consider restructuring,” he recommended.

Investors should also filter and retain stocks with strong fundamentals to help their portfolios decline less than the general market, and vice-versa, when the market recovers, these stocks will also increase more strongly. Investors should also maintain a safe margin lending ratio to avoid losses during market fluctuations.

However, experts believe that the stock market still has room for medium- and long-term growth. According to Dung, the market can continue to rise thanks to stable macroeconomic factors, government policies promoting growth, and gradually recovering listed company profits.

He added that external demand remains very strong. Many active funds and individual investors have not yet fully disbursed the cash in their portfolios and are waiting to buy when the market corrects.

Toan agrees, saying that the current low interest rate environment will support the stock market's growth. Additionally, efforts by regulatory agencies to reform the market for the goal of upgrading to FTSE Russell's emerging market status in September serve as a foundation for the VN-Index to continue surpassing its peak.

TCSC estimates that current market valuations are higher than the 5-year median. The possibility of a market upgrade in September is also attracting investor capital. Therefore, TCSC's analysis team believes the VN-Index still has room to increase, but not as strongly as in July. The market will then enter a distribution phase (large investors selling shares after the market peaks) or a rotation of capital into other sectors. This means stock prices may move sideways or decline, and the overheating will subside.

Trong Hieu - Phuong Dong - Tat Dat