Traders work on a trading floor of BIDV Securities JSC. — VNA/VNS Photo
The domestic stock market experienced choppy sessions last week and finished lower on profit-taking activities and negative sentiment.
Due to being highly vulnerable to interest rates, any information regarding the central bank’s interest rate policies immediately influences the market.
On the Hồ Chí Minh Stock Exchange (HoSE), the VN-Index closed last week at 1,261.9 points, and the HNX-Index on the Hà Nội Stock Exchange (HNX) was last traded at 241.7 points.
For the week, the former declined 0.9 per cent while the latter hardly changed.
The liquidity remained on an upward trend, as the trading of the whole market reached VNĐ27.67 trillion per session (US$1.1 billion), 37.6 per cent from the previous week.
Meanwhile, foreign investors were net sellers, with an outflow of nearly VNĐ6 trillion over the week.
Đinh Quang Hinh, head of the Macro and Market Strategy Department of VNDirect Securities Company, said that short-term risks are on the rise as the market grapples with unexpected news at both domestic and international levels.
Specifically, recent macroeconomic indicators in the United States, including the Purchasing Managers' Index (PMI) for services, PMI for manufacturing and higher-than-anticipated jobless claims, indicate a robust growth outlook for the US economy. This has raised doubts about a potential rate cut by the US Federal Reserve.
Expectations for a Fed rate cut in the September meeting have diminished to 51 per cent, compared to the previous week's 68 per cent. This development triggered a significant market correction for the US stock indices on the fifth day.
Despite intervention efforts by the the State Bank of Việt Nam (SBV), exchange rate pressures in the domestic market have yet to ease.
Hinh said the interbank overnight interest rates surpassed the 5 per cent threshold.
During trading sessions on May 22 and 23, several commercial banks sought liquidity support from the central bank through high-volume tenders on OMO (open market operation) channel.
SBV has also raised the OMO interest rate to 4.5 per cent a year, marking a 25 basis point increase from before.
The information has immediately impacted the stock market, which is considered a sensitive channel to interest rates, according to the expert from VNDirect.
Phạm Bình Phương, an expert from Mirae Asset Securities (Vietnam), said that the VN-Index experienced a decline as it approached the 1,280-1,290 point range, aligning with the cautious predictions of many investors.
During the week, the index also reached its lowest point at 1,250 before rebounding.
He expects that the VN-Index will be less volatile this week after finding support at key levels. However, given the unfavourable short-term outlook, he recommends investors focus on fundamental factors and current valuations when considering buying or holding stocks.
According to an expert from Saigon - Hanoi Securities JSC (SHS), the medium-term trend of the VN-Index is expected to return to the range of 1,250-1,300 points after a significant downward movement.
In a positive scenario, the benchmark may continue its accumulation phase within the above range. In a less optimistic scenario, the index could consolidate within a broader range of 1,200-1,250 points.
Despite some favourable macroeconomic news, such as growth in exports and imports and a trade surplus of $6.36 billion, exchange rate pressures persist as SBV continues to issue new bonds and the winning bid interest rate for bonds has risen from 4 per cent to 4.2 per cent a year. — VNS