As Vietnam’s stock market rallied through 2023, low-priced and small-cap stocks once again became the focus of retail investors—until a sharp sell-off on August 18, when the VN-Index plunged over 55 points, marking the steepest drop of the year.
The VNSmallcap Index surged more than 27% year-to-date by late August, outperforming blue-chip benchmarks like the VN30. Analysts say small investors, driven by limited capital, tend to favor cheaper shares, believing they offer “lower risk” despite their volatility. “Many investors feel safer buying more shares of a low-priced stock,” said Huynh Minh Tuan, founder of FIDT.
With more than 150,000 new trading accounts opened in July—three times higher than pre-2020 levels—the speculative mood has returned. The P/E ratio of VNSmallcap stocks hit 22, its highest since 2014, reflecting inflated valuations.
But the risk remains severe. When small caps fall, they often crash hard—as seen after price-manipulation scandals involving the FLC and APEC groups, where shares lost up to 90% from their peaks.
Retail investor Vuong Ngoc Phung learned the lesson firsthand: “I used to hold on, hoping prices would recover. Now I cut losses if a stock drops 5%.” Her shift reflects a growing awareness among individual investors that speculation, while tempting, requires strict risk control—or it can quickly turn disastrous.
This article is a condensed and translated summary (original in Vietnamese, VN) of a feature published in the October 2023 issue of Bloomberg Businessweek Vietnam.