VN Index expected to fall before US rate hike

Monday, Nov 30, 2015 08:05

An investor watches his stocks in Bao Viet securities floor in Ha Noi last Friday. — VNS Photo Viet Thanh

HA NOI (Biz Hub) — The benchmark VN Index on the HCM Stock Exchange may fall to between 575 and 585 points this week, as listed banks become more cautious ahead of the US central bank's meeting, Maritime Securities Incorporate (MSI) wrote in a weekly forecast.

Meanwhile, the VN Index on the HCM Stock Exchange dropped 1.3 per cent on Friday to close the week at 582.86 points. The southern index fell 3.6 per cent over the week and 4.8 per cent in the past three weeks.

The HNX Index on the Ha Noi Stock Exchange inched down 0.5 per cent on Friday to finish the week at 81.49 points. The northern index declined 0.1 per cent over the week after a slight gain during the previous two weeks.

In case of a likely interest rate hike by the US central bank, the US dollar will become stronger than the Vietnamese dong and will put pressure on Viet Nam's fiscal policy, MSI said.

The company noted that Viet Nam's central bank may cope with this scenario by tightening the monetary policy and raising its foreign exchange rate between the dong and the US dollar by a maximum four per cent.

The possibility of a foreign exchange rate hike will likely put pressure on local banks, as customers flock to withdraw their dong-dominated savings before they become devalued against the dollar.

In fact, trading last week was driven by very high foreign exchange rates, which nearly reached the ceiling price of VND22,548 per dollar, Bao Viet Securities Corporation (BVSC) said.

This could result in the largest listed banks, such as Vietcombank and the Bank for Investment and Development of Vietnam (BIDV), extend their decline this week, as they have fallen in the last five days.

In addition, Vietcombank also fell as the Government Inspectorate announced earlier last week that it would conduct inspections of some key organisations and enterprises, including Vietcombank. The bank lost 5.7 per cent during the week.

BIDV dropped 9.4 per cent over the last five days, following the issuance of more than 607 million shares to complete the merger with Mekong Housing Development Bank and to raise its capitalisation to $1.52 billion.

Additionally, global oil prices remained one of the most influential factors on the national stock market, as their increases resulted in declines by plastics producers.

The US benchmark crude West Texas Intermediate (WTI) gained 6.6 per cent from the previous week to trade at $43.04 per barrel on Thursday, while the Euro-based Brent crude was up 3.4 per cent to trade at $46.17 per barrel.

Domestic plastic producers such as Binh Minh Plastic Joint Stock Company (BMP) dropped 6.6 per cent, Tien Phong Plastic Joint Stock Company (NTP) fell 8.2 per cent and Rang Dong Plastic Joint Stock Company (RDP) was down 1.3 per cent from the previous week.

In addition, Vinamilk (VNM) and Masan Group (MSN) also pulled the market down after they received increasing sell orders from investors. VNM fell 5.3 per cent and MSN was down 4.8 per cent from the previous week.

Last week, the national stock market traded an average 219.6 million shares per day worth VND3 trillion ($132.3 million), an increase of 16 per cent in volume and 1 per cent in value compared to the previous week. — VNS

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