Vietnam’s primary stock index, the VN-Index, experienced a significant drop of 5.86% during Monday morning trading, as investors initiated a sell-off due to geopolitical uncertainties and rising oil prices.
On Monday, the VN-Index experienced a 6.38% fall from its reference level, marking the sharpest dip in almost a year. The last substantial drop was seen on April 8, when the index declined by 6.43%. This was a result of a prolonged market correction after the announcement of reciprocal tariffs by the U.S. President.
Despite pessimistic predictions regarding short-term market developments from many securities companies prior to Monday’s trading, a drastic drop in the VN-Index was not anticipated. Amidst pressure from negative events at home and abroad, MBS analysts predict that the index may drop to around 1,700–1,750 points, a decline of about 20–70 points compared to the previous week’s closing level.
Similarly, Yuanta Securities Vietnam suggested that the index could decline to a support zone of 1,715–1,740 points before a potential technical rebound occurs.
An MBS analyst pointed out that the domestic stock market showed strong resilience to the pressure of slightly increasing deposit interest rates before the Middle East conflict. The VN-Index had reached the 1,900-point level. However, the market now faces risks related to inflation, exports, financial instability, and supply chain disruptions due to the interest-rate pressure and the Middle East conflict.
Tyler Nguyen Manh Dung, Senior Director of Market Strategy Research at HSC Securities, attributed the sharp market correction to a sudden increase in margin calls from securities firms. Dung warned of a potential sharp market fall tomorrow if there is a lack of capital to absorb the volume of shares waiting for forced liquidation at floor prices.
Le Vu Kim Tinh, branch director at Phu Hung Securities, echoed Dung’s thoughts, adding that the deeper cause of the market correction is a series of negative developments related to geopolitical tensions.
Despite the shocking correction, there are still some positive market signals. Tinh noted that oil and gas stocks continue to act as a market pillar due to benefits from the escalating Middle East conflict.
Dung also highlighted that shares of some banks and many securities companies have corrected to levels that present attractive buying opportunities.
Despite the widespread decline, 16 stocks remained in positive territory after an hour of trading on the HoSE, with oil and gas shares accounting for most of these gainers. The rally in oil and gas stocks is expected to continue as Brent crude oil prices surged nearly 20% to $111 due to escalating conflict in the Middle East raising investor concerns that supply could tighten further.
What was the extent of the drop in the VN-Index?
The VN-Index experienced a significant drop of 5.86% during Monday morning trading.
What factors led to the drop in the VN-Index?
The drop in the VN-Index was attributed to a series of negative developments related to geopolitical tensions and a sudden increase in margin calls from securities firms.
Despite the market decline, what positive signals were identified?
Despite the market correction, oil and gas stocks continue to act as a market pillar, and shares of some banks and many securities companies present attractive buying opportunities.
