Global stock indices movements as of November 15. (Photo: countryeconomy.com) The market benchmark VN-Index finished November 15 at 911.9 points, a declineof 3.1% from the previous day's level. This was the lowest in more than 25months since October 5, 2020.
A drop of 3.1% made the country's stock market the biggest loser in Asia onNovember 15. Most of the major markets in the region such as Japan, China, and theRepublic of Korea, have recovered well recently. However, the positive effectdid not influence the Vietnamese stock market, according to cafef.vn.
Since the beginning of November, the benchmark has lost another 116 points,equivalent to a decrease of 11.3%. The losses were approximately the fall ofthe whole September, when the index dipped the most in 31 months since it hitthe bottom during the COVID-19 pandemic period.
The market was even the world's worst performer in a week, a month, a quarter,six months, and a year, since the beginning of the year, and from the peak.
The sharp fall since the beginning of November caused the marketto lose 463 trillion VND (19.6 billion USD) in market capitalisation on the HoChi Minh Stock Exchange (HoSE). In just half a month, the market dropped morethan 500 trillion VND in market capitalisation on three exchanges. Compared tothe peak in early April, the loss even reached nearly 2.68 quadrillion VND.
The market was in a bear state amid a wave of margin calls of many real estatebusiness leaders, casting a shadow on many stocks. The sell-off activitiescreated a domino effect, causing a number of stocks to hit floor prices.
Despite the strong corrections, bottom-fishing demand remains weak as a part ofcash flow has been disbursed to production. Higher interest rates alsostimulated more investors to shift to less risky assets like bank savings.Moreover, the tightening management of corporate bond issuance activities andlimited credit room somewhat affected the stock market's sentiment.
Looming sentiment dragging the market's liquidity to the lowest level since thebeginning of 2021 with the average matching value on HoSE less than 8.7trillion VND. There are no longer billion-dollar trading sessions like the boomperiod one year ago, but more and more sessions below 10 trillion VND.
At that time, cash inflows from foreign investors became a highlight as theycontinuously net bought during the period. From the beginning of November untilnow, they net bought more than 6.2 billion VND on HoSE alone, the largestfigure in recent months. Earlier this year, they net sold nearly 4.2 trillionVND.
Capital flows from East Asia and Thailand continue to play animportant role in attracting foreign investors to return to the market.Outstanding passive funds such as Fubon ETF and Diamond ETF continuouslyattract money with a value of hundreds, even trillions of dong.In addition, well-known foreign funds like Dragon Capital and VinaCapital alsoshowed signs of disbursing recently.
The attractive valuation of the Vietnamese stock market is one of the appealingfactors to foreign investors. Data from Bloomberg showed that the VN-Index'sprice to earning ratio (P/E) is currently at 9.4x, even lower than the bottomhit at the end of March 2020 and equivalent to the bottom during the 2011-12crisis.
Although short-term difficulties are inevitable, Dragon Capital believes thatmany risks have been priced-in and the market valuation is in a very attractivearea.
Similarly, ACB Securities Company (ACBS) also assesses that the VN-Index stillmaintains a greater attraction for long-term investors compared to peer-to-peermarkets with P/E of 9.8x.
SGI Capital believes that the market has been at the oversold zonecorresponding to the historical cheap valuation area.
“The nature of the stock market is always volatile and difficult to predict inthe short term, investors who can overcome the current crisis will reap greatresults when the market and the economy return to the growth cycle," saidthe investment fund./.
VNA
