By Phuong Thao - The Saigon Times Daily
HCMC – The local market took a nosedive to hit a 13-month low on Tuesday as investors rushed to offload shares to cut losses. The VN-Index lost a hefty 13.5 points, or 3.01%, against the day earlier to 434.42.
On the Hochiminh Stock Exchange, bids surged by 39% from the previous session to 56.7 million shares while offers rocketed by 66.8% to over 74 million shares. Liquidity, however, recovered sharply with 47.2 million shares worth VND1.1 trillion changing hands, increasing by 89% and 52% respectively from the session earlier .
The market opened sharply lower and subsequently fell in two stages before hitting a daily low of 433.60 halfway through the final matching phase and finally closing marginally above that level.
Only nine stocks moved up while a total of 236 others closed in red, of which TMP was the only one to hit the ceiling price and 147 stocks plunged to the floor prices. Sectors were sharply lower while MSN, TMP, CMG and CMV were rarities as big gainers on Tuesday.
Sacombank (STB) remained the most traded stock that edged back 1.3% to VND15,700 on the volume of 1.5 million shares. Refrigeration Electrical Engineering Corp. (REE) came next, losing 3.6% from the previous day to VND15,900 with 1.4 million shares traded.
Foreigners returned to the buying side, acquiring 2.5 million shares worth VND99 billion and offloading 2.4 million shares worth VND85 billion. They accounted for 8.6% and 7.4% of the market’s buying and selling value respectively.
The Hanoi market also plunged on Tuesday also in higher turnover of VND773 billion. The HNX-Index lost another 4.69 points, or 3.63%, from the previous session and ended at 124.4.
There were 20 stocks rising and 286 stocks falling, of which two stocks shot to the ceiling prices while 56 stocks dropped to the floor prices. Foreigners were net sellers and accounted for 0.48% and 1.07% of the market’s buying and selling value respectively.
Fiachra Mac Cana, managing director of HCMC Securities Corp., said on Tuesday’s breakdown triggered waves of new margin calls especially in speculative issues that no doubt quickly led to some forced selling particularly in those counters that had dominated trading so far this year.
“The current market correction is being driven by continued fears of oversupply coupled with the bursting of the bubble in speculative stocks. The former has been triggered by a combination of regulatory reform in the banking sector and lack of access to cheap credit. Meanwhile, the latter theme just ran out of steam as every conceivable excuse to push up certain stocks has already been tried,” Mac Cana commented.
“On Tuesday’s move looks to us as being close to a capitulation, which while it looks ugly right now usually signals the last phase of a market correction. We give the same advice as before, medium and longer term players can buy cautiously while short-term players should wait but stand prepared when the time is right, Mac Cana added.