News about the arrest of prominent businessman and boss of V-League club Hanoi Nguyen Duc Kien caused the stock market to take a nosedive as investors rushed to offload shares given fear of further losses.
The VN-Index erased all the gains it obtained over the past two weeks, shedding 20.44 points, or 4.67%, from a day earlier to 416.84.
The market opened lower and began to drop sharply in two stages before a brief recovery triggered more selling and the market ended the morning session deep in the red. In the afternoon, stocks hit the low of 416.23 points before closing just above that level.
Liquidity on the Hochiminh Stock Exchange skyrocketed on strong selling with volume and value surging 91% and 83% against the previous day to 70 million shares worth VND1.2 trillion. The put-through market turned active with large transactions in EIB, DHG, NKG, LCG and VNM.
Only 15 stocks rose while 270 others declined, of which one stock went to the ceiling price and 212 stocks plunged to the floor prices. In terms of the VN-Index, MPC, VNS and IMP made the biggest positive contribution while GAS, MSN, VNM and VCB made the biggest negative contribution.
Tan Tao Investment Industry Corporation (ITA) took the lead in terms of liquidity on the volume of 3.8 million shares, followed by Military Bank (MBB) and Sacom Development and Investment Corporation (SAM) with 3.2 million and 2.5 million shares traded respectively. Meanwhile, PetroVietnam Fertilizer and Chemicals Corporation (DPM) remained the value leader with over VND78 billion.
While local investors were in a panic, foreign investors saw the sharp decline as a chance to pick up stocks. They posted up a net buying value of VND130 billion, the highest level since May, making up 25.6% and 14.9% of the market’s buying and selling value respectively.
The Hanoi market was also hard hit while turnover soared around 87% to VND527 billion. The HNX-Index lost a hefty 3.7 points, or 5.24%, from the session earlier to close at 66.95.
The number of losing stocks was 10 times higher than that of rising ones at 250 to 25, including nine stocks closing at the ceiling prices and 168 others plunging to the floor prices. Foreigners accounted for 2.7% of the buying value and 1.7% of the selling value.
HCMC Securities Corp. said the market might sell off again on Wednesday. This feels like a sharp shock to the system. From a medium-term point of view, it looks like the beginning of a clean-up and a clear message that any activity which ignores the law will not be tolerated.
“Hence, we may be seeing a more active phase of restructuring of the financial system towards a more mature and transparent system. Today’s drop appears to be mostly sentiment driven outside of the affected stocks and should draw bargain hunters over the coming days. Therefore, we see support not far below current levels and are comfortable in advising investors to buy into weakness from tomorrow,” it said.
The Saigon Times Daily
