VN-Index falls below 1,800 on first day of market upgrade

VN-Index falls below 1,800 on first day of market upgrade

The VN-Index opened in positive territory before quickly reversing course as selling pressure spread across the market.

A building developed by Novaland in HCM City. Shares of the property developer dipped by 1.2 per cent. — Photo novaland.com.vn

The market benchmark VN-Index lost nearly 16 points and slipped below the 1,800-point mark on Monday as strong selling by both domestic and foreign investors weighed on the market, with securities and property stocks among the hardest hit.

The decline came as Việt Nam's stock market officially moved from frontier to secondary emerging market status under FTSE Russell on Monday. The upgrade is expected to bring billions of US dollars in foreign capital into the market through a four-stage transition process running until September next year.

According to several securities companies, however, the positive effects of the upgrade had already begun to be priced in after FTSE Russell confirmed the reclassification in April. 

As a result, the official change in market status was not expected to have a major impact on the benchmark index, although it could still generate positive changes in the market.

Trading on the first day of the new classification was volatile.

The VN-Index opened in positive territory before quickly reversing course as selling pressure spread across the market. The benchmark even lost more than 32 points and approached the 1,780-point level in early trade.

Selling dominated the Hochiminh Stock Exchange (HoSE), where 205 stocks declined, twice the number of gainers. The large-cap basket also tilted towards sellers, with 15 constituents closing below their reference prices and one hitting its daily floor.

Market liquidity reached more than VNĐ17.3 trillion (US$665 million), falling sharply from the previous session.

Property stocks, including those in the Vingroup ecosystem, put the heaviest pressure on the benchmark.

Vingroup (VIC) and Vinhomes (VHM) dropped 2.6 per cent and 4.1 per cent, respectively, together taking more than 15 points off the VN-Index. Excluding movements in the two stocks, the benchmark would have been almost unchanged from its reference level.

Shares of other property developers, including Novaland (NVL), Quoc Cuong Gia Lai (QCG), DIC Corp (DIG) and Ha Do Group (HDG), also finished in negative territory, although their declines were limited to no more than 1.5 per cent.

Securities stocks, which have been expected to benefit from Việt Nam's market upgrade, also reversed earlier gains. Major stocks including VNDirect Securities (VND), VPS Securities (VCK), VIX Securities (VIX), Vietcap Securities (VCI) and SSI Securities (SSI) all fell by more than 2 per cent.

On the Hanoi Stock Exchange (HNX), the HNX-Index also fell 0.91 points to 274.38 points.

Foreign investors also returned to net selling in the first session after Việt Nam's upgrade, following net purchases worth more than VNĐ1 trillion in the previous session.

They net sold nearly VNĐ668.3 billion worth of shares on HoSE and VNĐ14.2 billion on HNX.  

Bizhub