Retail investors lose enthusiasm for stock market

The 30-year-old, an office clerk in a media company in HCMC, says she has blocked contacts with their stock brokers, and turned off notifications from all stock-market chat groups.

Earlier this year, when the markets were bullish, she would check the trading application every five minutes to see the prices.

She had not imagined that large cap stocks with good fundamentals such as HPG (Hoa Phat Group Joint Stock Company), TCB (Vietnam Technological and Commercial Joint Stock Bank) and VHM (Vinhomes Joint Stock Company) she had in her portfolio would tank by over 30%.

That was at the end of August when she last checked her account and benchmark VN-Index was at around 1,250 points.

On October 25 it closed at 997.7.

Trang says: "The VN-Index has fallen below 1,000 points, and ... so I could have racked up losses of over 50%. But I don’t care anymore."

Hai, who runs a café in HCMC’s Binh Tan’s District, invested VND3 billion in stocks in late May when the VN-Index corrected from a peak of 1,500.

It then went up as she had hoped, and she made a profit of around VND1 billion.

She invested another VND1 billion, but this time things were different and her stocks frequently fell to the floor, or the bottom of the daily permitted trading band.

As of October 24 her account was worth only VND1.7 billion.

She does not have any more money to invest, and is apprehensive about cutting and running.

FLC (FLC Group Joint Stock Company) accounts for nearly 20% of her portfolio but trading in the stock has been suspended since September because of the company’s failure to comply with disclosure regulations.

She says: "I am fed up with stocks now. I am sitting idle, waiting for the market’s recovery. If my losses shrink to millions of dong, I will sell all the stocks."

A poll of readers by VnExpress last week found 89% saying they were making losses, with 46% losing over half their investments and 22% losing 30-50%.

After rising steadily for three months early this year the markets have been losing due to a confluence of events like the prosecution of executives of some companies, canceling land auction results in HCMC’s Thu Thiem peninsula, rise in interest rates, and money flows switching to other asset classes and business.

In the last six months trading per session has been worth less than VND20 trillion, or half the average between late last year and early this year.

During some sessions, when the market declined sharply, the value plummeted to VND8 billion.

Nguyen Thanh Trung, head of the investment consulting department at Thanh Cong Securities, says investors are in "hibernation."

He classifies them into three groups.

The first are investors who traded frequently but have become inactive after the State Securities Commission cracked down on price manipulation such as in the cases of FLC Group Joint Stock Company and Louis Holdings Joint Stock Company.

The second are retail investors with assets of below VND2 billion, the largest and most emotional group. The more losses they suffer, the more inactive they become, blocking contacts with their stock brokers and ceasing to trade, waiting for a recovery.

"Most investors in the second group do not have clear investment strategies, and so when the VN-Index falls by 30%, they might incur losses of 50-60%," Trung says.

The third are investors with holdings of over VND20 billion. But they have already sold out, especially when the VN-Index was around the threshold of 1,400-1,500 points, and are waiting for new opportunities to buy again.

Vo Cong Minh, sales director at ACB Securities, says most investors who have ceased trading are inexperienced while veterans continue to buy and sell.

The most common reasons for investors staying out are lack of cash, unwillingness to cut losses and pessimism about the market, he says.

Another reason is securities companies’ recommendation now to investors to stay out of the market, marking a U-turn from their forecasts of a 30-50% rise earlier this year, he says.

Nguyen Hoai Thu, managing director and head of investment at VinaCapital, a leading asset manager in Vietnam, says the market has been badly affected by geopolitical tensions, the gloomy global economic situation, tight monetary policies, and crackdown on listed firms and individuals who violate regulations.

Nguyen Thuy Tien, retail client manager at Viet Dragon Securities, says: "Investors should be cautious, avoiding all in disbursement or bottom fishing."