VN-Index down 23% after 6 weeks

According to the latest statistics from SGI Investment Fund Management Joint Stock Company (SGI Capital), in May 2022, domestic investment cash flow is under the short-term influence of the tightening of the corporate bond market and the control speculative cash flow real estate and securities. Investor sentiment is also influenced by stock market The global stock market dropped due to the US Federal Reserve’s (Fed) tightening of the currency, VN-Index dropped 23% after only 6 weeks.

Vietnam’s stock market entered the top 3 markets with the strongest decline globally in 2022, after Russia and Hungary. SGI Capital’s expert team analyzes: This sharp drop has the difference of economy Vietnam is having the most stable macroeconomic balance in the past 15 years with inflation, exchange rate, and interest rate pressures not too great and under control. Many businesses are entering the post-COVID recovery cycle with strong profit growth in the next 1-3 years. Therefore, the reasons to sell off stocks to very cheap this time do not come from internal factors of the business.

VN-Index down 23% after 6 weeks - 1

Analysts say that, with the current situation, the downtrend is still overwhelming (Artwork).

According to SGI Capital, in a strong rising economy like Vietnam, the stock market is the convergence of many of the most elite enterprises in all industries with outstanding business performance and growth prospects. VN-Index and excellent stocks will continue to maintain an uptrend in the long term at an average rate of 10-20%/year.

“However, there are always events, news that govern investor sentiment and cash inflows that create short-term fluctuations that are sometimes extreme and excessive in the market. We are in such a moment, especially as the 2 years of COVID have attracted a lot of new individual investors to the market with little investment experience and knowledge. The market’s sell-off this time can be seen as the end of the era of cheap and easy money; at the same time, opening the beginning of a new cycle, going up more sustainably based on the recovery of the real economy and the growth of businesses.”, stated the SGI Capital report.

In the opinion of some securities experts, the continuous decline in the stock market over the past time has caused many investor accounts to plummet and lose all profits and part of the principal in the two-year increase in 2020 – 2021. Many investors are falling into panic and selling their accounts at all costs, including very good and cheap stocks. “The market panic and sell-off are once again providing the best investment opportunity since the COVID-19 bottom in March 2020. If we have idle money, this is the right time for us to increase the proportion of investment. If you are holding a portfolio that has fallen sharply, the right thing to do is to restructure to focus on the most attractive stocks and wait patiently for the results,” said a representative of SGI Capital.

In order to be successful in the long term and limit big losses on this volatile stock market, according to SGI Capital, it is necessary to avoid doing two things: FOMO (fear of losing opportunities) buying when the market and stocks are hot and Sell ​​out to cut losses when a good portfolio of stocks has plummeted to a very cheap valuation as it is now. On the other hand, a good and cheap stock portfolio will increase in value over time and deliver decent returns.

In the past 10 years, Vietnam’s stock market has had three sharp declines, leading to P/E valuation (an index assessing the relationship between market price of stocks with earnings per share) at very low levels. The first time was at the end of 2012 with the focus on the banking system crisis, bad debt reached 17%, deposit interest rate increased to 14%/year, the real estate market dropped sharply and lost liquidity. Businesses of almost every industry are severely affected; The second time in early 2016, under the pressure of the Fed to raise interest rates and stop QE (economic stimulus packages), money withdrew sharply from emerging markets, while the renminbi fell sharply, China’s economy declined. rapid decline put great pressure on the VND exchange rate and the Vietnamese economy. VN-Index decreased by 18%.

The 3rd time in March 2020 due to the widespread COVID pandemic causing a serious global economic crisis. VN-Index fell 34%. Experts of SGI Capital said that: These big declines all brought the VN-Index’s P/E valuation to below 12.x and opened up very good investment opportunities after that with an increase of 35-80% after one year.

Faced with the sharp declines in the stock market in recent trading sessions, recently, the State Securities Commission (SSC) together with the Vietnam Stock Exchange (VNX) hosted a meeting. meeting with Ho Chi Minh City Stock Exchange (HoSE), Hanoi Stock Exchange (HNX), Vietnam Securities Depository Center (VSD) and 23 Securities Company (SSC) is the leading member of the market in terms of capital and stock brokerage market share to identify and evaluate the stock market situation and propose solutions to soon stabilize the stock market.

Accordingly, the State Securities Commission will assign VNX to direct HNX and HOSE to issue warnings and request listed companies to disclose information when stocks show signs of increasing or decreasing at the ceiling or floor prices from 5 to 10 sessions. “In the immediate future, the Committee requires VNX to direct HoSE and HNX to disclose information about securities companies’ proprietary transactions. In the coming time, the State Securities Commission will submit to the Ministry for amendments and supplements to Circular 96/2020/TT-BTC dated November 16, 2020 of the Ministry of Finance guiding the disclosure of information on the stock market”, a representative of the State Securities Commission said. .

In order to limit the possibility of price impact from the derivatives stock market on the underlying stock market, the State Securities Commission has approved for VSD to issue the Regulation on margin, clearing and settlement of derivative securities. In which, one of the new points of this regulation is to adjust the final settlement price of the VN30 index futures contract.

Accordingly, the final settlement price will be the simple arithmetic average of the VN30 index in the last 30 minutes of the expiration date (including 15 minutes of continuous order matching and 15 minutes of periodic closing). after subtracting the 3 highest and 3 lowest index values ​​of the continuous matching session, instead of just taking the VN30 index value of the periodic closing session as calculated before. this. “The calculation of the final payment price according to the above method will be applied by VSD after the Exchange completes the adjustment of the sample contract information and publishes it at least 7 working days in accordance with current regulations”, said Mr. SSC director said.

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