From the end of 2024 to the beginning of this year, many technology telecommunications stocks such as FPT or CMG have had a relatively strong price decline of around 20%.
Yesterday, domestic stock indices continued to have a vibrant trading session with green spreading. The increase of Vingroup stocks and many banking bluechips led the VN-Index to increase by nearly 8 points at times. However, as the market climbed higher, many traders also developed a profit-taking mentality combined with foreign investors still net selling, making the increase unsustainable. Many stocks narrowed their increase and even turned red at the end of the session, causing the VN-Index to end the session up only 1.6 points, to 1,331.92 points.
Among the stocks that fell yesterday, there were still telecommunications and technology stocks. From the end of 2024 to the beginning of this year, many telecommunications and technology stocks such as FPT or CMG have had a relatively strong price decline of around 20%. The performance of FPT in particular or Vietnamese technology stocks in general closely follows the performance of US technology stocks and typically the Magnificent 7 group (ie 7 big technology stocks led by Nvidia).
The US and Vietnamese technology stocks grew impressively from late 2022 to late 2024. Valuations were pushed up very high and then adjusted sharply from the emergence of the AI DeepSeek artificial intelligence system, which was identified as reshaping the global AI race at a cheaper cost.
Mr. Tran Hoang Son, Director of Market Strategy, VPBank Securities JSC said: “FPT by the end of last week’s session was also the first time it was below the 200-day line for the first time after a year-long uptrend. The stock’s valuation has reached a very high level after growing very hotly in the past two years following the international technology group. FPT has reached its highest valuation in history since its listing, nearly 30 times according to P/E valuation. As for P/B, the valuation has reached a level close to 7.5 times, too far from the reasonable value threshold. Foreign investors have also taken advantage of FPT’s strong profit-taking recently.”
In the past, it was rare to see FPT’s stock open to foreign room, always at the maximum level of 49%. Currently, the percentage of foreign ownership of FPT has decreased from 49% to about 44%.
Technology stocks used to be the favorite choice of this foreign fund. However, Pyn Elite Fund is no longer a major shareholder in CMG while FPT is no longer in the top 10 of the fund’s portfolio.
“Excitement is part of the nature of the stock market,” said Petri Deryng, fund manager of PYN Elite Fund. “Investors tend to get hyped up on stocks in a particular narrow sector or a single country. In such cases, valuations can rise significantly faster than underlying earnings growth.”
Mr. Le Thanh Tung, Head of Investment Consulting Department, VPS Securities JSC shared: “For an industry group to lead two consecutive waves of only 12.5%, it is very difficult for that story to continue for two consecutive years. Even our stock market is the same, last year it was a story about technology, this year there is a shift in the story from the technology group to groups related to finance, construction, and public investment. Those are two completely different pictures, from 2024 to 2025 and I believe that this year will be new stories that we can still invest in. However, we need to choose the industry group more carefully”.
Market participants say no one can say for sure whether tech stocks have peaked or whether the highest is yet to come. Peaks and troughs in the stock market can only be known when they are passed.
However, the recent story of technology stocks shows that, even in a bull market, choosing the wrong stocks with expensive valuations still causes many professional investors and investment funds to taste the bitter fruit of losses.