World’s worst-performing stocks have Vietnam investors on edge

World’s worst-performing stocks have Vietnam investors on edge

As a result, an economy the World Bank calls a “development success story” for transitioning from one of the world’s poorest nations to a middle-income level in a single generation is under siege.

Bucking recent trends, the benchmark VN Index rose as much as 2.6 per cent by midday on Tuesday to the highest level since November 10.

Ha Hai Dang, a 26-year-old broker who manages nearly 200 retail investor accounts for a Hanoi-based securities company, said that about 80 per cent to 90 per cent of his customers are suffering losses.

“One or two years ago, I did not even need to invite people to open trading accounts, but now the tables have turned,” Dang said.

In October, 96,290 new trading accounts were opened by domestic retail investors – a decline for the fifth consecutive month after hitting a peak of more than 476,000 in May, according to data from the Vietnam Securities Depository. It’s the fewest number of new accounts by local investors since February 2021.

Many of the Vietnamese who are new to the market are staying on the sidelines or getting out, and liquidity is falling. The average trading value on the Ho Chi Minh City Stock Exchange has been $US436 million per day this month through November 21. That’s down from about $US761 million per day this year, according to data compiled by Bloomberg.

The market’s decline has also sparked a cycle of selling to meet margin loan requirements, worsening losses for those remaining behind, said Phung Trung Kien, founder of asset management firm Vietnam Holdings.

In a report last week, Fitch Ratings offered support to Vietnamese regulators’s efforts to “contain potential risks” in the real estate sector as “modestly positive”. However, Fitch added, those moves “could result in near-term financial system volatility”.

‘Positive view’

While domestic investors get pummeled, some foreigners see a buying opportunity, with the VN Index trading at 8.3 times projected earnings – the lowest since at least December 2012.

Overseas investors snapped up a net $US315 million worth of stocks so far this month after being net sellers in October and September. That puts it on track to be the biggest monthly purchase since June 2020, according to data compiled by Bloomberg.

“Overall, I share a positive view of Vietnam’s future economic growth,” said Jiyun Chung, Ho Chi Minh City-based head of equities at Manulife IM Vietnam, who said her fund is buying. “This is good opportunity to accumulate good companies at discounted prices.”

But that shift hasn’t turned the market around, and with the government crackdown continuing, the nation’s retail investors have a bleak outlook, said Dang, the Hanoi-based broker.

“Current investors’ expectations are now to reduce losses, not to get rich like previous years,” he said.


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