Individual investors account for 90 percent of transactions
After hitting a record high of 1,420 points at the start of July this year, the VN Index plunged to 1,243.51 points on July 19. Currently, the VN index sits at 1350 points, up around 8% over the past two months. In July and August of this year, the number of new securities accounts opened by F0 investors exceeded 100,000 accounts per month, sending the total number of new securities accounts opened in the first eight months of 2021 equal to 130% of that of the whole of the last years. This shows that the stock market has become an attractive investment channel during social distancing.
Along with a sharp increase in the number of new securities accounts, statistics of securities companies show that the proportion of the value of transactions of domestic individual investors has reached its highest level in recent years, accounting for 90% of total transactions. on the market. Market liquidity has remained at a high level, with the average total transaction value in recent months reaching nearly VND 22.5 trillion per trading session as of August 31. Cash flow from individual investors has played an important role in market dominance. Although foreign investors sold 51.4 trillion VND in the first nine months of the year, the VN index still rose by more than 22% compared to the end of 2020.
According to FiinPro, a provider of integration and financial data services, the lowest interest rate over the past five years in Vietnam has significantly supported the cash flow in the equity channel. It is reflected in the number of newly opened securities accounts and the increase in market liquidity, in particular investors’ assets on deposit with brokerage firms. It was estimated that at the end of August this year, deposit balances of VND 90 trillion from investors were waiting for opportunities to enter the market.
A representative from Dragon Capital Fund Management Company said the stock market in August and three weeks of September continued to recover from the low in July this year. It showed that the market was relatively stable as the Covid-19 pandemic was still developing in a complicated way and socio-economic activities were strongly influenced by the strengthening of social distancing. Investors expect a more positive fourth quarter as social distancing gradually eases.
Expectations on bank stocks
The stock market has seen positive developments, but cash flow in the stock market in recent months has mostly been focused on mid-cap stocks and pennies. Many penny stocks rose sharply, even breaking the peak despite negative trading results. Meanwhile, bank stocks, known as royal stocks, fell 20-30%, affected by negative news from bad debts.
With such developments, a securities expert said the economic reopening would bring the possibility that speculative cash flow, F0 investor money, which temporarily poured into the stock market during social distancing, could be pulled back to resume operations. normal, such as production and business. In addition, investors may withdraw money from the stock market for fear that the Covid-19 pandemic will recur.
Experts said that the growing momentum of the stock market in the coming times depends a lot on bank stocks. The State Bank of Vietnam has authorized commercial banks continue to restructure debts and support companies to overcome difficulties. Therefore, bank stocks are expected to receive huge cash flow at the start of the fourth quarter as social distancing loosens and many companies resume operations under the new normal conditions.
According to Mr. Huynh Anh Tuan, CEO of Dong-A Securities Company, it takes a large sum of money to activate the bullish momentum in bank stocks. When the economy opens up more clearly, royal stocks will attract cash flow again.
Mr. Do Trung Thanh, head of the business analysis department of PSI Securities Company, also said the cash flow would be divided into stocks benefiting from the loosening of social distancing.
Specifically, actions related to public investment, such as infrastructure construction and building materials, will attract cash flow as these are activities with rapid impacts on economic recovery. Additionally, stocks in the energy, retail and logistics sectors will also benefit when domestic demand rebounds strongly after social distancing.