What causes VN-Index to “fall” 68 points?

April 25th is a sad session of Vietnamese securities when a series of stock groups were under strong selling pressure, VN-Index there was a time when it dropped more than 80 points, marking a record level ever. By the end of the session, the main index narrowed its drop to 68 points. HOSE market capitalization also decreased by more than 270.6 trillion dong

Mr. Hoang Cong Tuan, Chief Economist of MB Securities Joint Stock Company (MBS), said that today’s drop may be a record, but calculated as a percentage, this is not the first session. biggest decrease. However, this is also one of the strongest declines in trading history. In essence, today’s pessimism was pushed up, stocks, even in the basket of VN30 stocks, were sold very strongly.

“I sympathize with investors as well as the general market. However, I think this is not a time for investors to be pessimistic, actually, times like this investors have also experienced a lot. The market in essence has ups and downs, sometimes it’s too exciting, sometimes it’s going to be as difficult as it is now,” said Mr. Tuan.

April 25th is a sad session of Vietnamese stock market. Illustration.

The reason for today’s drop is random, but looking deeper, it is the convergence of many, many factors. The first factor is that the world stock market also dropped very strongly, under the pressure of the US Federal Reserve (Fed) to raise interest rates in the near future. The Fed’s rate hike announcement was quite strong.

The second factor is the domestic market story. It is undeniable that in the past time, many groups of stocks have been raised too high. The price increase is too high, while investors use too much margin leverage (buying securities using borrowed money from securities companies) to invest.

Currently, margin has narrowed, so the market needs to have a new price level. In fact, many investors are under great pressure to reduce leverage to reduce risk.

For example, if an investor is holding about 50% of the margin, they will have to cut off all the margin or cut a part to ensure safety. This led to downward pressure on many groups of stocks, even on the market. Observing the market, it can be seen that this is the selling session of those who cut margin.

MBS chief economist Hoang Cong Tuan said that this is not the time to sell stocks, but only to cut margin to increase the long-term withstand pressure. Investors who do not use margin can continue to hold shares. Because the market’s ability to rise again is still highly appreciated.

Mr. Tuan said that Vietnam’s economy has always remained stable and good basic stocks will recover, but investors who are “hugging” stocks with high margin usage rate can hardly bear it. withstand pressure from securities companies to sell mortgages. When stocks are sold off mortgage, the opportunity to return to the market is difficult.

However, through the recent sharp decline, many stocks have returned to the low price level, and even returned to the threshold of 2020. For example, some banking stocks have returned to close. the price of the end of 2020, the beginning of 2021, the current price discount level is very deep.

At the moment, it’s a good time to hold stocks, reduce leverage pressure and after a few recovery sessions investors will see the stock prices are very cheap, looking back may regret selling today.

According to Mr. Nguyen The Minh, Analysis Director of Retail Banking, Yuanta Securities Vietnam, from the Friday session (April 22) last week, the price drop occurred in basic stock groups and Today, it has spread to other groups of stocks.

In previous times, this situation happened in the group of speculative stocks, then the basic group. Up to the present time, the decline in prices has taken place almost evenly among stock groups. “This situation, in my opinion, is caused by investors selling stocks to reduce the margin borrowing rate. I think the total margin size is now also reduced by 40-50%”, Mr. Minh said.

The reason for today’s drop is random, but looking deeper, it is the convergence of many, many factors. Illustration.

With the experience from the speculative stock sell-off, investors are worried that this pressure will persist. Invisibly, they actively sold out and sold off mortgages from securities companies, creating the “Domino” price drop effect like today, the market dropped so sharply.

The mortgage sale of shares will be carried out by the securities company when the investor (individual or organization) uses financial leverage and the stock price falls below the threshold allowed by the securities company but the investor has not pay more.

Besides, with the sentiment that the VN-Index fell to 1,400 points, investors’ next expectation is that the VN-Index can hold the 1,350 mark, so when it breaks through this mark, the market immediately plummets to the 1,300 threshold. point.

“I think, in the current market context, investors using margin are under the greatest pressure. In my opinion, they should bring the margin ratio to zero, otherwise they don’t want to be under selling pressure from securities companies. securities should pay more money to increase capital safety”, Mr. Minh said.

From the time of 2020 until now, it is worth noting that there is a downward shock due to COVID-19 and the fact that, after periods of “shock” reduction, the market will increase very quickly.

But the story is that the account has to avoid the stock being sold off the mortgage. For investors using their own capital, they should wait and not sell at this time, Director of Analysis of Individual Client Division, Yuanta Securities Vietnam Company recommends.

* Invite readers to watch the programs broadcast by Vietnam Television on TV Online and VTVGo!