Last Wednesday, the SBV decided to lower the ceiling interest rates on Vietnamese dong deposits from six per cent to 5.5 per cent and on US dollar deposits from one per cent to 0.75 per cent. — Photo tapchitaichinh

HA NOI (Biz Hub) — Investors were upbeat over news of the State Bank of Viet Nam's interest rate cut last week, but lingering caution over market outlook restrained the rise of Vietnamese stock indices.

Last Wednesday, the SBV decided to lower the ceiling interest rates on Vietnamese dong deposits from six per cent to 5.5 per cent and on US dollar deposits from one per cent to 0.75 per cent.

This is the second time that the SBV has slashed regulatory interest rates this year.

According to Dang Bao Khanh, general director of SeABank, this decision will likely bring investment to other channels, including the securities market.

"The stock market will receive new capital investment flows, though not surging, as the economy is still undergoing difficulties," Khanh said.

Many experts also agree that the SBV decision will have a positive impact on the Vietnamese stock markets because stock prices usually moved in a direction opposite that of interest rates.

At the HCM City Stock Exchange, the benchmark VN-Index once more increased by more than 600 points, adding a cumulative 1.58 per cent during the week to close at 600.84 points.

Blue chips recovered as the VN30, which tracks the top 30 shares by market value and liquidity, improved by 1.47 per cent to finish at 638.78 points.

Ocean Group rebounded late last week after several declining sessions due to the arrest and detention of its former leader.

Other large-cap shares were actively traded, including PV Gas, Masan Group, Bao Viet Holdings and Vietcombank, as well as Sacombank and Vietinbank.

Liquidity improved slightly compared with that of the previous week, with daily market volume increasing by more than eight per cent to an average of 110 million shares worth VND1.874 trillion ($88.8 million) per session.

Foreign investors ended their eight-week selling streak and returned as net buyers in the HCM City market. Their net purchase value was modest but helped ease investor pessimism.

They were responsible for a total net purchase of more than VND375 billion ($17.8 million), focusing on blue chips such as PetroVietnam Drilling and Wells Service, Kinh Do Corp and Hoa Phat Group.

They remained net sellers in the Ha Noi market but with a small value of just VND26 billion ($1.2 million).

Foreign purchases are important to the recovery of the market, which could decline during some sessions this week but is necessary to test the demand and determine the trading trend of foreigners, according to analysts at FPT Securities Company.

At the Ha Noi Stock Exchange, the HNX-Index also climbed by 1.14 per cent to end at 88.03 points, but trading volume decreased by more than 14 per cent from that of the previous week, averaging 51.4 million shares worth more than VND725 billion ($34.4 million). — VNS