The Ho Chi Minh Stock Exchange (HoSE), on which the VN-Index is based, had never seen so much red as 478 of its tickers lost and only 20 gained. Out of these, a record 276 tickers hit their floor prices, the lowest they could go in a trading day.

Total trading volume hit VND18.4 trillion ($793.1 million), above average for a trading day on HoSE in the past month, and nearly four times higher than the past-three-year average, before markets were rocked by the Covid-19 pandemic.

Thursday’s session was one of four major losses Vietnam’s benchmark index had endured in the past month. On January 19, the market sank 5.11 percent, but recovered in the three sessions thereafter.

On Tuesday, it slumped 2.57 percent, and on Wednesday, even further at 3.43 percent.

Reports from securities firms in the final quarter of last year had warned Vietnam’s stock market had been growing faster than the general economy. The Covid-19 pandemic had caused other investment channels such as real estate, savings, and commerce to lose their attraction, with investors instead putting their money to work in equity markets.

This money had inflated trading volume to historical peaks, from around VND3-5 trillion daily between 2018-2019 to as high as VND14 trillion by the end of December. With the VN-Index steadily recovering from its March 2020 nadir of 662 points, at the height of the first Covid-19 wave, new investors flocked to the market to catch an uptrend that seemed to have no end.

However, these new investors, with little experience, lack of market information and discipline, tended to follow whatever the market was doing, and could easily panic-sell when the market turned. This situation was exacerbated when over-optimistic investors increasingly used margin tools to maximize gains, analysts said.

"The market has not had any significant correction after the outbreak of Covid-19 in Vietnam. Investors have therefore not endured major losses, so have little experience behaving in special circumstances like this," said Hoang Thach Lan, head of investment advisory at brokerage VDSC, referring to panic selling seen during Thursday’s session.

The VN-Index began freefalling at the start of the session, losing 55 points on news of Vietnam’s first two intra-community Covid-19 cases in two months, falling further in the afternoon session when authorities announced 82 more cases.

At the close, the VN30-Index for the stock market’s 30 largest caps sank 6.73 percent, with 29 stocks losing and one gaining. A total 28 stocks in this basket sank to their floor prices.

Only EIB of private lender Eximbank gained 2.3 percent, while NVL of real estate developer Novaland fell 6.7 percent, slightly short of its lower circuit.

Foreign investors seem to be taking the opportunity to bottom fish, scooping up VND482 billion worth of shares, the biggest net buy they have made in nearly two weeks, focusing on HPG of steelmaker Hoa Phat Group, VHM of real estate developer Vinhomes, and STB of private lender Sacombank, all of which floored.

The HNX-Index for the Hanoi Stock Exchange, home to mid- and smaller caps, also plunged 8.03 percent, while the UPCoM-Index for the Unlisted Public Companies Market sank 7.17 percent.