After gaining for the third week in a row, the market benchmark VN-Index is expected to trade positively this week as investor sentiment improves on optimistic news.

Last week, the VN-Index on the Ho Chi Minh Exchange (HoSE) closed Friday at 1,115.22 points, a decrease of 0.16 per cent, while the HNX-Index on the Ha Noi Stock Exchange (HNX) dropped 0.47 per cent to 228.44 points.

However, both indices still marked a weekly gain. The former rose 0.7 per cent, marking its third-week rising streak, while the latter increased for four consecutive weeks, up 0.4 per cent.

The market liquidity remained above the average level.

In particular, the liquidity on the southern bourse fell by 6.5 per cent to nearly VND85.5 trillion (US$3.6 billion), with a trading volume also down 9.2 per cent over the previous week. This showed a strong divergence among small-cap and large-cap stocks. Liquidity on the northern exchange HNX declined slightly to nearly VND10.3 trillion.

Foreign investors were active last week and returned to net buy strongly on HOSE with a value of more than VND1.7 trillion, focusing on stocks in steel, financial services, and securities industries. They were also net buyers on HNX with a value of VND94.55 billion.

Saigon - Hanoi Securities JSC (SHS) said that the VN-Index was quite positive when it soared at the area of 1,110 points in the first two sessions of the week, but was under selling pressure to correct at the range of 1,125 - 1,130 points.

The securities firm also said that recent macroeconomic developments tend to gradually improve when the US Federal Reserve paused its rate hiking spree on Wednesday after 10 consecutive increases while inflation showed signs of cooling down.

Domestically, the central bank of Viet Nam also announced Friday to trim operating interest rates, the fourth cut this year. The Government also had carried out measures to boost growth, support businesses, and remove difficulties for corporate bond and real estate markets, SHS added.

However, expectations of more interest rate hikes in the second half of the year by the Fed and the European Central Bank (ECB) may hinder the world economy's recovery, affecting the Vietnamese economy. The Government's supportive policies also need more time to show effects.

Nevertheless, as the stock market will usually react early, SHS expects the market to shift to a positive movement when investor sentiment gradually improves.

Experts from Vietcombank Securities Company (VCBS) said that as soon as the Fed decided to keep interest rates steady, the State Bank of Vietnam (SBV) quickly took appropriate actions to accelerate the reduction of lending interest rates for businesses and people, supporting the recovery of economic growth.

It is forecast that in the coming weeks, the interest rates will be lowered, including deposit interest rates, lending rates and interbank rates with a reduction of approximately 50 basis points depending on the term.

For the financial market, the rapid decrease in interest rates is expected to shift cash flows from deposit investment channels to riskier investment channels like the stock market, according to VCBS.

Experts believe that the stock market will be more positive in the second half of 2023, possibly increasing significantly after about 3-7 months since the latest announcement of interest rate reduction was issued. The VN-Index tends to increase this year, as the rate levels decrease and the exchange rates maintain at stable levels while market liquidity is abundant. — VNS