VN Index sees historic peaks, new risks appear
The Vietnamese stock market experienced a historic week with many new records broken.
November 25 witnessed bustling trading sessions when the VN Index surpassed the 1,500 point benchmark. The cash flowed poured into blue-chips and overwhelmed the profit-taking selling trend in the groups of shares which have seen strong rises over many months.
The sharp increases in bank and realty shares helped the VN Index increase sharply and climb to new peaks. The strong rise of bank shares was the factor that helped balance the market when the profit-taking pressure soared.
According to SSI (Saigon Securities Incorporated) Research, most commercial banks had used up the credit growth rate quotas of 2021 allocated to them by the end of Q3. Therefore, the State Bank of Vietnam (SBV) may lift the credit growth rate limits of some commercial banks which have high asset quality and good safety indexes.
Prior to that, the stock market witnessed an unprecedented profit-taking campaign. The VN Index once dropped sharply by 32 points, but the bottom-fishing demand was still high, thus leading to a record trading session with VND56.3 trillion, or $2.4 billion worth of shares transferred.
This was the turning point that helped turn the market stronger, and many shares have changed from decreasing to floor price levels to increasing to the ceiling price levels.
$1 billion, or VND23 trillion, is a very high liquidity level if compared with the VND6.2 trillion per session in 2020 and VND18 trillion in H1 2021.
Securities companies reported that people have poured tens of trillions of dong, or $3 billion, into stocks so far this year, a huge amount which shows great interest in the stock market.
For new investors, securities are considered a stable investment channel. The stock market is no longer a channel for groups of small investors to surf. In the first 10 months of the year, more than 1.1 million new trading accounts were opened, which was equal to the total accounts of the last three years combined.
Though investors’ feelings about the market improved last week, a new worry appeared which caused the VN Index fall from the 1,500 point benchmark late last week. The appearance of a new coronavirus variant, plus the pressure from foreign investors’ net sales, had adverse impacts on the stock market.
Risks from unpredictability of Covid
The stock market is bustling amid the excitement of the global markets, created by the largest ever government support packages, large idle cash flow and impressive business performance by large corporations. Investors have put high hopes on the demand stimulus programs applied all over the world.
The US stock market has risen in recent sessions. Nasdaq for the first time surpassed the 16,000 point benchmark. However, Dow Jones unexpectedly fell by 900 points last week, the worst decline in 2021, following the news about new coronavirus variant.
VN Index also fell from the 1,500 point peak in the last trading session. The return of foreign investors’ strong net sales and the considerable decrease in trading value, analysts predicted, would cause markets to fluctuate this week.
The pandemic developments remain complicated. European countries are facing a sharp rise in the number of infections. The information about Omicron variant will affect investors.
The oil price has fallen by 13 percent, the sharpest fall since April 2020.
In Vietnam, the expectations on the stock market are still high. A representative of PYN Elite said the VND800 trillion bailout in 2022-2024 would push the VN Index to 2,500 point peak by the end of 2024.
At first, Pyn Elite Fund predicted the 1,800 point peak for VN Index, but it later raised the predicted level to 2,500.
Stock markets in Southeast Asia including Viet Nam have been severely impacted by the COVID-19 pandemic outbreak, according to studies presented at the annual Conference on Business, Economics & Resources held from November 25 to 26.
Recently, the cash flow has poured massively into the stock, gold, and real estate markets. Investors call this phenomenon cheap money, but it also raises concerns over inflation for the economy.