"The stock market is now like a roller coaster," Son, a non-professional investor in Ho Chi Minh City, exclaimed after watching the electronic board on 5/9. This phrase, echoing across investor forums, captures the VN-Index's rapid intraday fluctuations.
This morning, the Ho Chi Minh City Stock Exchange's benchmark index easily surpassed the psychological 1,700-point mark at the opening bell and set a record high of 1,711 points less than two hours later. The euphoria abruptly ended in the afternoon session as widespread selling pressure emerged. In just half an hour, the index reversed from gains to losses, plummeting 29 points.
The market not only experienced a sharp decline but also witnessed the largest intraday trading range (the difference between the highest and lowest points) in the past 10 days.
According to Bui Cong Toan, a consultant at VNDirect Securities Corporation, the VN-Index's rise was fueled by unevenly distributed cash flow, concentrated mainly in Vingroup stocks and real estate. As the market crossed key psychological thresholds, investors began taking profits.
"The initial selling pressure was scattered, then concentrated on some leading stocks, pushing prices to near floor levels and triggering massive sell-offs. Stop-loss orders from swing traders, especially those with high leverage, also contributed to the sudden surge in selling pressure," Toan said.
Several securities experts share the view that after a nearly five-month rally that propelled the VN-Index from below 1,100 points to its current level, investors have become cautious, prioritizing capital preservation over maximizing profits. Concerns about a prolonged correction have prompted them to sell at the first sign of a downturn, waiting for opportunities to buy back later.
The continuous net selling trend by foreign investors is also considered a catalyst for today's sell-off. Typically, foreign investors increase their investments a few months after a market upgrade. However, in Vietnam, they have been net sellers of over 42 trillion VND in August and continued to sell off around 5 trillion VND in the first days of September, while the upgrade results will be announced early next month.
"This development provides a seemingly justifiable reason for domestic individual investors' pessimism, leading to aggressive selling at the first sign of a market decline," Toan explained.
According to Tran Thi Hong Nhung, Deputy Director of Investment Analysis and Consulting at Guotai Junan Securities (Vietnam), the VN-Index's sharp reversal on 5/9 was also influenced by the outflow of funds from bank stocks, the group that previously led market rallies and provided support during declines.
However, Nhung considers today's market movements normal, given the record-high index and a period of limited news. Supportive information, such as the US Federal Reserve's interest rate decision, market upgrade results, and business performance figures, are expected later this month or early next month.
"This correction is necessary and healthy for the market if it wants to reach higher levels," Nhung stated.
Sharing this view, the VNDirect expert believes today's drop was not a shock for medium- to long-term investors. He argues that a 1.7% adjustment in the VN-Index and a 4-5% decline in some stocks are not sufficient to confirm a short-term downtrend. The market needs two or three more sessions, perhaps longer, to retest the 1,700-point level, the strongest resistance level in history.
In its end-of-session update, the Vietcombank Securities analysis team predicts a more cautious approach to investment in the coming sessions. Market fluctuations are inevitable, with the index potentially falling further to 1,645 points.
Similarly, an expert from Saigon-Hanoi Securities (SHS) suggests the market is showing signs of a short-term peak. This means that after a strong rally and record highs, the index will correct, consolidate, and then retest previous price levels before moving higher.
Securities companies advise investors to invest only when the market shows signs of equilibrium, reduce margin ratios, and maintain purchasing power to manage risks and seek short-term trading opportunities.
Phuong Dong
