Stock Market Crash Makes Amateur Investors Nervous

Amateur investors are reconsidering their decision to enter the stock market and some are even considering quitting to avoid further losses following the VN-Index losing spree.

With seven of the eight stocks in his portfolio in the red, some of them up to 35 percent, Hanoi’s Hoang Minh deleted the trading app on his smartphone.

“I’ve spent most of my savings on stocks and there’s not enough money to average,” said the 30-year-old tech worker, who opened his first trading account four months ago.

With an investment of VND100 million ($4,300), he had a 30 percent profit after buying some speculative stocks when the index topped 1,500 points in early April.

But the unexpected collapse means your portfolio has fallen 20 percent below cost.

“I’m considering selling three or four stocks at a loss, as they’re unlikely to go back up,” he says.

Minh is among many retail investors whose get-rich-quick dreams have been shattered by the market slump in recent weeks.

After finishing last year as one of the best in the world with an increase of almost 36 percent, the VN index started this year strong by reaching a new peak of 1,528 points.

Analysts were optimistic that it would be another prosperous year, with some even forecasting that the benchmark index would rise to 1,850 points.

But various factors, including the arrest of company leaders for allegedly manipulating the market for personal gain, the rising risk of global inflation and the crisis between Russia and Ukraine, caused the market to plunge from the first week of April.

The VN-Index has lost more than 16 percent since the January peak, with many blue-chip stocks losing double figures.

Huong Trang, who became a stock investor seven months ago, posted a question last week in a Facebook group with more than 500,000 investors about what to do with his declining portfolio.

“My investment is down 29 percent and I don’t know whether to put more money now to cut the loss or sell the tumbling stock,” said the 28-year-old tour guide in Hanoi, who invested in blue-chip stocks. such as Techcombank and the country’s largest private conglomerate, Vingroup.

Some of Trang’s friends have advised her to stop investing altogether and sell at any price, while some brokers have invited her to join their consulting groups at Zalo for a small fee with the promise of double-digit profits.

“I’m really confused. I’m sorry I entered the market in the first place.”

Stocks emerged as a new asset class for many Vietnamese investors during the two years of Covid-19, with 1.53 million people opening trading accounts last year, up 50 percent from the previous four years, according to the Vietnam Securities Depository.

Until last month, more than 5 percent of the population were stock investors, meaning the government’s target was achieved three years early.

Stockbrokers said that in the last year retail investors had the biggest impact on the market, accounting for more than 80 percent of transactions.

But many new investors, who had only been trading for a few months, left the market after posting losses, Le Chi Phuc, chief executive of investment fund SGI Capital, told a recent forum.

Financial expert Tran Dinh Phuong said that most people are speculators who focus on short-term gains and are easily affected by a herd mentality.

Many so-called investors lack knowledge and experience and are easily swayed, and that is why the market has been seeing heavy losses, he added.

Economist Tran Thanh Hai said the Vietnamese stock market is not reflecting the health of companies, with many stocks rising despite poor corporate performance.

Recent arrests and punishments of stock manipulators and even officials have shown that the government is moving in the right direction to improve stock market transparency, he added.

But despite the drop, some analysts are still confident in the long-term scenario.

HSBC said in a recent note that it is confident in the long-term outlook for the market as companies have been “on a roll” in terms of growth and earnings in recent years.

Foreign investors still have room in blue-chip stocks, the country’s export potential remains strong and there is a possibility of Vietnam becoming an emerging market, all of which make it an attractive market, he said.

With the VN index showing signs of recovery in the last two weeks, Minh’s hopes have started to rise again, but he is wary of investing further.

“I used to have high profit expectations, but I realized that it’s not easy to make money in stocks.”

By Dat Nguyen

Add Comment