Vietnam's benchmark VN-Index records sharpest drop in 25-year history

VIETNAM'S BENCHMARK VN INDEX RECORDS SHARPEST DROP IN 25 YEAR HISTORY

Ho Chi Minh Stock Exchange (HoSE) witnessed its most severe single day decline on October 20, 2025, as the VN Index plunged by 94.76 points, or 5.47%, to close at 1,636.43. The sell off overwhelmed the market, with 325 stocks declining—108 of which hit the floor price—while only 34 stocks advanced.

The VN30 group, representing the 30 largest cap stocks, experienced an even steeper drop of 106.28 points (5.38%), settling at 1,870.86. All 30 stocks in the index fell, with 13—including GVR, HDB, HPG, MBB, MSN, SHB, SSI, STB, TCB, and TPB—hitting their floor prices.

Liquidity surged to VND53,300 billion ($2.02 billion) on HoSE, the highest in a month, driven by bottom fishing demand. However, the buying pressure was insufficient to counterbalance the heavy selling, leaving many stocks stranded at floor prices with large unfilled sell orders.

MARKET PANIC TRIGGERED BY BOND INSPECTION REPORTS

Nguyen Minh Hoang, Director of Analysis at Nhat Viet Securities (VFS), attributed the crash to late week reports on bond inspection results involving major conglomerates such as Masan and Novaland. The negative sentiment triggered floor price drops and sparked a wave of panic selling across the market.

Hoang noted that the market had enjoyed a prolonged rally since April, following the U.S. tariff incident, with the VN Index climbing from around 1,090 to nearly 1,800 points. Excluding contributions from Vingroup, many stocks still doubled in price during this period. However, the market had not undergone a meaningful correction, making the current decline a necessary shakeout.

Drawing parallels with the 2020 2021 period, Hoang recalled that after a sharp drop in March 2020 due to the COVID 19 outbreak, the market surged for the next 9 10 months. A similar pattern emerged in January 2021, when the VN Index dropped around 200 points over 4 5 sessions before resuming its upward trend.

FUNDAMENTALS REMAIN STRONG DESPITE SHORT TERM VOLATILITY

Despite the sharp decline, Hoang emphasized that Vietnam’s economic fundamentals remain solid, supported by sustained growth and ongoing government stimulus policies. Inflation and exchange rate pressures, potential side effects of these policies, are still under control.

From a valuation perspective, the market’s P/E ratio had risen above 16 before Q3 earnings results were released, surpassing the 5 10 year average. While Vietnamese equities are no longer considered cheap, Hoang argued that the correction could pave the way for a healthier rebound, especially as improved Q3 profits may make valuations more attractive.

A BUYING OPPORTUNITY FOR LONG TERM INVESTORS

Hoang advised investors to view the correction as an opportunity rather than a risk. He noted that many had hesitated to buy during the market’s ascent and remain cautious even after the decline. "If you don’t buy when it’s up and don’t buy when it’s down, you’ll never invest," he remarked.

He urged investors to reassess medium and long term trends, suggesting that those holding cash should consider gradual entry points. Given the strong selling momentum, Hoang expects the correction to continue at least until the morning session of October 21. Key support levels to watch are around 1,600 points or 1,550 1,560 points, where buying demand may re emerge.

Nguyen Trong Dinh Tam, Deputy Director of Analysis at ASEAN Securities, echoed this sentiment, stating that investors should expect volatility. He recalled that during the 2021 bull run, similar sharp corrections occurred, presenting major buying opportunities—especially for margin positions.

Tam predicted that after the shakeout, the VN Index would likely resume its upward trajectory from Q2 2025, supported by macroeconomic resilience and qualitative improvements tied to Vietnam’s potential market status upgrade.

LOOKING AHEAD: MEDIUM AND LONG TERM PROSPECTS

Hoang remained optimistic about the medium and long term outlook, citing upcoming catalysts such as Vietnam’s market status upgrade and initial public offerings (IPOs) of large enterprises. He encouraged investors to stay calm, observe the market professionally, and identify reasonable entry points rather than succumbing to panic.

The current correction, while sharp, may ultimately strengthen the market’s foundation for future growth.