Why did stocks fall the most in history?
The long-term increase and large margin ratio created a domino effect that "overthrew" the psychology of F0 investors. Today's trading session (January 19) recorded a series of records broken in the 20-year history of the Vietnamese stock market.
The VN-Index plummeted, at one point losing nearly 75 points before gradually recovering and closing with a decrease of 61 points. This was the largest decrease in absolute value, although compared to previous sessions, today's amplitude was only 5.11%. The last time the index representing the Ho Chi Minh City Stock Exchange decreased by this level was on March 9, 2020, when the index fell 55.95 points. Order matching liquidity was nearly 18,000 billion VND and could be higher if the system received orders from securities companies. Nearly 90% of stocks, fund certificates and warrants on the Ho Chi Minh City Stock Exchange closed below the reference.
Mr. Nguyen Xuan Binh - Director of Analysis of KB Securities Vietnam Company (KBSV) said that there are two main reasons why the market decreased "beyond imagination".
First, the previous hot market caused the margin usage to be pushed too high and too much.Securities companyno more lending sources. This is not a bad thing but it is a signal that most of the cash flow has been disbursed. Therefore, the market needs a shake-up to shake off the amount of stocks held, thereby attracting the cash flow that is still standing outside to create momentum for further growth.
Second, the influence of F0 investors on market trends is increasing. This group has invested a lot of money, but their knowledge and experience in investing are not much, so their psychology is easily shaken. The profit-taking selling pressure from experienced investors spread to this group, creating a domino effect.
"Today's decline is not surprising because the market had been hot before, attracting inexperienced investors," Mr. Binh shared.
Investors monitor the price board as the VN-Index fell sharply on the morning of January 19. Photo: Thanh Nguyen.
Sharing the same view, Mr. Huynh Van Khoi - Business Director of ACB Securities Company Headquarters said that the market adjustment was necessary and was predicted in advance. However, the recent increase was too sudden and there was no break to create a new price base, so the decrease must be very deep.
In the context that factors that usually affect the stock market such as the macro economy and the operations of each business and industry group do not show any bad news, the only unusual thing about today's session is the overreaction of F0 investors.
Mr. Khoi said that this is an understandable reason because they have never experienced such strong fluctuations. The capital may not be much, but when the market shows signs of a sharp decline, they are ready to sell at any price to protect their achievements.
However, Mr. Khoi affirmed that it is very difficult to correctly assess the market trend at this time because there is no accurate information about supply and demand. This stems from the fact thatHoSE trading systemThere were signs of overload from around 13:10. Cash flow started to join in to buy stocks with good foundations and leading the market such as HPG, ACB, VHM... but orders could not be sent.
"Investors complained that they could not place buy orders at the floor price, nor could they cancel old sell orders, so the closing price of the VN-Index did not truly reflect investor sentiment," said Mr. Khoi.
