VN-Index fell the most in Asia, Vietnam stocks fell to 2-year lows

The sharp decline in recent times has made the valuation of cheap Vietnamese securities even cheaper. The trailing P/E of VN-Index has now retreated to 9.83 times, equivalent to past crises.

The stock market has just experienced a forgettable session with the red color covering the entire time. VN-Index even lost 50 points at one point with hundreds of stocks hitting the floor before recovering slightly at the end of the session. At the close, the whole market recorded more than 300 stocks that fell to the floor, in which only VN30 had 11 stocks that lost all range and no stocks increased.

VN-Index ended the session with a decrease of 3.89% to 947.24 points, the lowest since November 6, 2020. This is also the biggest drop of the index in nearly 5 months since June 13. The drop of 3.89% also made Vietnam’s stock market become the biggest drop in Asia on November 10.

The sharp drop took place in the context of a wave of “call margin” of a series of real estate business leaders putting great pressure on the market while the cash inflow was somewhat limited. Some real estate stocks such as NVL, PDR even fell to the floor “white buyers” right from the beginning of the session and had almost no liquidity even though the selling surplus was up to tens of millions of units.

In the context that the mobilization of capital from bank credits and bonds is tightened, the margin lending channel of securities companies plays an important role in “balancing” capital sources for many real estate businesses. However, the unfavorable market movements caused many stocks to plummet, forcing many business leaders who are pledging/mortgaging stocks as collateral to borrow capital into a state of being forced to sell.

SGI Capital believes that the spiral will continue until the following divergences appear: (1) Bonds of corporate groups that are profitable and have a healthy financial situation will attract new buyers when the price is lower. discount. (2) Bonds of a group of businesses with good assets can be exchanged by bondholders for real estate products or agreed to a longer repayment period with better interest rates. (3) Bonds of the group of enterprises that are not able to repay their debts will not be able to be restructured in any way. Bondholders will be able to recover very little of their principal over a long period of time.

“Without timely support, in the coming month, the stock market will continue to be under pressure due to limited cash flow from bond maturity pressure, call margin and deteriorating growth prospects,” said SGI Capital.

Opportunity for long-term accumulation?

Difficulties in the short term are inevitable but there are still positive points in the long term after the market purification activities. The sharp decline in recent times has made the valuation of cheap Vietnamese securities even cheaper. According to data from Bloomberg, VN-Index’s trailing P/E has retreated to 9.83 times, equivalent to past crises and much lower than the 5-year average P/E of 5 years. 15,x.

According to SGI Capital, the market has gone deep into the oversold zone corresponding to the historical cheap valuation zone. This drop has brought the VN-Index to reflect the huge liquidity risks that the business sector and the Vietnamese banking system are experiencing. The investment fund emphasized that “the nature of the stock market is always volatile and difficult to predict in the short-term, investors who can overcome the current crisis period and stick to it will reap great results when the market and the economy returns to the growth cycle” .

In the same opinion, TPS Securities believes that this is the right time to accumulate stocks with good internals, positive business results and high liquidity. With a forecast of EPS growth of the whole market over 20%, TPS estimates a P/E forward 2022 of only 9.x. Compared to other countries in the region, Vietnam’s stock market is very attractive with P/E forward 2022 at almost the lowest level but with the highest ROE.

Ha Linh/Market Lifestyle