70th anniversary of Hanoi's Liberation Day Vietnam - Asia 2023 Smart City Summit Hanoi celebrates 15 years of administrative boundary adjustment 12th Vietnam-France decentrialized cooperation conference 31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Banking & Finance
F0 investors learn hard lesson from stock market volatility
Ngoc Mai - Nguyen Hanh 15:03, 2021/01/24
F0 investors put their money in stocks they barely know of but were recommended by others, so they become vulnerable when things go wrong and do not know what to do, said an expert.

The majority of new investors in the stock market, known as investor F0, have not experienced market volatility, so recent slumps of the benchmark Vn-Index was seen as a shock for many of them and led to a large sell-off by inexperienced investors to cut losses.

 The rise of the stock market at a time of economic difficulty and low interest rate environment lure new investors. Photo: Viet Linh. 

Despite previous warnings from experts that the stock market would soon go through a correction phase following its steady rise in the past two and a half months, F0 investors continues to pump money into the market in the search for easy profit.

The market finally succumbed and suffered a free-fall by 60.94 points on January 19 to settle at 1,131, down 5.11% against the previous trading session.

CEO of Take Profit Consulting and Investment Company Phan Linh told Hanoitimes F0 investors have been a major cause for such slump, as the sign of market going down triggered a wave of sell-off from inexperienced investors who grew nervous and tried to cut losses at any costs.

Since the Vn-Index plunged to its rock-bottom in March 2020 with a 25% slump, the index has been on the steady rise and ended the last trading session of the year at 1,103.87, representing an increase of 14.9% against early 2020 and 67% compared to its lowest point.

“The rise of the stock market at a time of economic difficulty and low interest rate environment lure new investors,” stated Mr. Linh, but adding the majority of them come in unprepared as they look for quick profit.

“F0 investors put their money in stocks they barely know of, based on others’ recommendations, so they become vulnerable when things go wrong and do not know what to do,” he added.

Data from the Vietnam Securities Depository (VSD) revealed in December 2020, the stock market witnessed 64,243 new accounts, the all-time high number in a month. This resulted in a total of 393,659 new stock accounts in 2020, up 109% year-on-year from 205,013 in the previous year.

Le Quang Minh, analysis director of Mirae Asset Vietnam (MAS), said the participation of F0 investors was key in keeping the Vn-Index going up at a time when foreign investors remained net seller.

“As the Tet holiday is fast approaching and the sentiment of taking profit after having seen the market going up for a while, selling pressure from individual investors would continue to last for the next few trading sessions,” Mr. Minh told Hanoitimes.

Mr. Phan Linh from Take Profit urged investors not to think short-term when investing in the stock market.

“A correction phase is necessary for the market to stabilize before trying to surpass the 1,200-resistant zone, as well as to shrug off a large amount of margin lending for more sustainable growth,” he stated.

“Any decision in the stock market should be based on technical assessment, and not following the herd behavior,” Mr. Linh concluded.

RELATED NEWS
TAG: Vietnam stock market VN-Index volatility low interest rates foreign investors
Other news
16:01, 2024/02/26
VCCI hosts 14 international investors to study Vietnam's potential
With a population of 100 million, a young workforce, a stable political system and attractive policies, Vietnam has attracted the interest of many global companies.
15:32, 2024/02/22
Enhanced local trade finance in Vietnam: A potential US$55 billion annual trade boost
International trade is an important driver of productivity, jobs, and development – but to be effective, adequate trade finance is essential.
16:31, 2024/02/15
Vietnam’s corporate bond market could grow to US$100bn: Finance Minister
The Ministry of Finance is expected to establish a separate bond market, strengthen inspection and auditing, and create conditions for businesses to raise capital.
20:08, 2024/02/14
Vietnam’s banking sector set to turn the corner in 2024
The fact that the Vietnamese dong depreciated by a modest 2.9% year on year in 2023 indicated high stability and improved foreign exchange reserves compared to the end of the previous year.
14:02, 2024/02/02
Vietnamese Gov’t remains steadfast in upgrading stock market to emerging status by 2025
The Ministry of Finance is expected to ease pre-transaction deposit requirements for foreign investors this year.
12:06, 2024/01/31
USD/VND exchange rate set to stabilize in second half of 2024
The central bank achieved some success in managing the foreign exchange market as the USD/VND exchange rate maintained a sliding rate of about 3.1% in 2023, despite some periods approaching the VND24,800 threshold.