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Vietnamese stocks plunged the most in the second quarter

Monday - 02/07/2018 09:52
After the first quarter of the year, Vietnam stock market was the fastest growing in the world, but the second quarter saw the strongest drop.
According to data from IndexQ, the Vietnamese market ranked first in the list of world stock markets plunged in the second quarter with nearly 18%.

Followed by Vietnam is the Argentine market with 16,32%, Turkey nearly 16% and Brazil with 14,76%.

Earlier, Vietnam ranked first in the list of markets with the best increase in the world in the first three months of 19.33%, 4% higher than the second largest market in Egypt.

A drop of nearly 18% in the last three months of the VN Index also marked the worst period since the fourth quarter of 2008 - the economic crisis. Compared to the peak of 1,200 points on April 9, VN Index has lost more than 250 points, equivalent to nearly 21%
Vietnam's stock market was down by nearly 18% after 3 months
Vietnam's stock market was down by nearly 18% after 3 months

The rise of the stock market, actually lasted from the second half of 2017 to the end of the first quarter 2018. Negative situation of the market started only when VN-Index surpassed 1,200 points. Resting on the highest peak of its history in just four trading sessions, the market opened for the sharpest decline since the economic crisis 10 years ago.

"When all the investors are excited, dreaming about the higher peaks, it's usually the crisis," one expert said at a time, and said that the stock market has been pushed too high. For a long time, only small fluctuations triggered sell action.

According to statistics of many securities companies, the valuation of P / E of Vietnam market was more than 22 times when VN-Index exceeded the historical threshold of more than 1,170 points.

"Vietnamese stocks are becoming expensive after nearly a year of continuous rise," said Nguyen The Minh, an analyst at Yuanta Securities. As evidenced by many of the securities companies' investment funds, they have lowered their portfolio by the end of the first quarter - when the market was the most excited.

Responding to world turbulence, from geopolitical tensions in Syria, the US-China trade war, to concerns about global capital movements as the Fed raised interest rates, causing the decline on a continuum.

Large cap stocks, which were the growth engine for the market in the previous period, became the biggest losers when the market plunged. The valuation becomes too high and these stocks are no longer attractive to hold, and become the first target to profit.

Cash flow from stock market listing, though not too withdrawn from the Vietnam market, but dispersed into other investment channels. This made the liquidity from the "players" in the market became inadequate. Large equity offerings from Vinhomes, Techcombank or Yeah1's recent acquisitions have absorbed significant redundancies from large funds in the market.

That is the reason, since the big correction started, the liquidity of the market became a problem too.
liquidity two stock exchange vietnam cophieuviet com
Liquidity of stock exchanges

Compared to the first 3 months of the year when VN-Index surpassed its historical peak, liquidity in the next 3 months significantly decreased. Total liquidity of both HNX and HoSE even dropped below VND100 trillion in the last two months.

There was no big cash flow, the recovery sessions almost recorded the transaction is quite gloomy, while liquidity increased sharply in the sell-off session. During the first 3 months, each session of HoSE trading from 7000 to 9000 billion. Previously, the level below 6,000 billion was considered low liquidity, in the recent sessions, the market liquidity was just over 3,000 billion, reaching 5,000 billion was considered positive.

"This is a signal that investors' confidence in the market's recovery is quite low," said the report of Viet Dragon Securities Company (VDSC).

Three months ago when the VN-Index historical milestones, experts and investors see the market will reach 1,500 points, even 2,000 points at the end of the year. So far, after the sharp decline, expectation to return to the threshold of 1,200 points when the "closing" 2018 has been considered positive, or otherwise just a return to the threshold of 1,100 points.

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