Vietnam’s stock market saw its most dramatic drop in 13 years with a total loss of VND63.3 trillion (US$3 billion) in market capitalization on Thursday.

The benchmark VN-Index of the Ho Chi Minh Stock Exchange (HoSE) and HNX-index of the Hanoi Stock Exchange (HNX) plunged 32.88 points (5.87 percent) and 4.9 points (6.40 percent) to 527.09 points and 71.66 points, respectively.

“In the morning session, around 85 percent of Vietnam equities struggled, leading the index to post its biggest intraday drop since November 2001,” Reuters reported.

Of the total VND63.3 trillion, HoSE lost VND56 trillion while HNX incurred the remaining loss.

The loss of VN-Index depended greatly on six big-cap stocks GAS, VNM, MSN, VIC, VCB, and BID, which accounted for nearly 55 percent of total market capitalization of the southern bourse's index.

During the Thursday session, with the exception of VIC and BID, the four other shares dropped by a large extent (GAS 6.6 percent, VNM 9 percent, MSN 6.5 percent, and VCB 1.8 percent), thereby contributing significantly to the drop of the index.

The market capitalizations of the six shares fell by VND33.2 trillion, equivalent to a 60 percent reduction in market capitalizations of the southern floor, contributing to a reduction of 20 points from a total of nearly 34 points that the VN-Index lost in this session.

However, the liquidity on Thursday reached the highest rate in the last 20 sessions, bringing total trading volume and value on both exchanges to more than 253.5 million shares and VND3.88 trillion.

The southern bourse saw 146.5 million shares worth over VND2.86 trillion changing hands, while the northern bourse witnessed 107 million shares worth more than VND1.01 trillion successfully traded.

During the session, while local investors sold their stocks en masse, foreign investors played the opposite role, trying to buy any stocks sold, even at high prices.

The VN-Index has lost around 13 percent since late March when it hit a high of more than four years, Reuters data showed.

‘Be cautious’

After the dramatic drop in the morning session, on Thursday afternoon the State Security Commission (SSC) officially issued a warning to the investor on its website at www.ssc.gov.vn, stating that “SSC will closely monitor unusual transactions and strictly handle any market manipulation case.”

“From the beginning of this year, Vietnam’s macroeconomic stability has been stable with positive prospects, while preliminary business results in the first quarter of listed companies showed more positive signs with decreasing losses,” it said.

Foreign institutions have issued positive assessments of the country’s economic recovery while the Foreign Indirect Investment inflow in the first four months rose almost two times over the same period last year, the commission said.

“In recent days, foreign investors have continued the trend of net buying. During the Thursday morning session, the local stock market indices declined sharply although market liquidity improved sharply and a large number of investment funds remained active buyers,” it elaborated.

In the morning session, the market went down due to the psychological impact of recent tensions in the East Sea, the commission said, adding that investors should keep calm and “be cautious to avoid being taken advantage of and badly influenced on their own investment decisions.”

On Wednesday, Vietnam said that Chinese vessels intentionally rammed Vietnamese ships in Vietnamese waters in the East Sea where Beijing has illegally deployed a giant oil rig.

At least six Vietnamese members of fisheries surveillance staff were injured after China’s vessels crashed into their ships on May 3, 4, and 7.

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