Stock investors lost 8,316 billion VND
Late on the evening of May 23, the State Bank announced a reduction in operating interest rates. Accordingly, the ceiling interest rate on deposits has been reduced to 5%/year. This is the third consecutive reduction by the State Bank within 2.5 months.
Immediately after that, many commercial banks simultaneously adjusted their deposit interest rates down. In some places, the highest rate "broke" the 7%/year mark. This is room for the banking system to reduce lending interest rates, thereby supporting businesses.
However, contrary to investors' expectations, despite the decrease in interest rates, the VN-Index not only did not increase but also decreased, causing investors to suffer significant losses.
The reason is that after the previous two interest rate cuts, the number of borrowers accessing cheap interest rates is not much, especially credit growth in the first quarter of 2023 is at a very low level.
After the news of interest rate reduction, the stock market not only did not increase but also declined, causing investors to lose VND8,316 billion. Illustrative photo
At the end of last week's trading session, VN-Index stopped at 1,063.76 points, down 2.09 points, equivalent to 0.2% compared to the session on May 23, the time before the third interest rate cut was announced. As a result, the market capitalization of the Ho Chi Minh City Stock Exchange decreased by VND8,316 billion.
VCBS Securities Company commented that last week, the market did not have many positive changes in terms of scores, but the differentiation was clearly shown with demand alternating to different industry groups to maintain scores in the range of 1,060 - 1,070 points. In which, the oil and gas and construction stocks were the most prominent with an increase of approximately 3%.
After the reduction of operating interest rates on May 23, the State Bank held a meeting with senior leaders of 26 commercial banks. Accordingly, commercial banks agreed to reduce lending interest rates by 0.5 percentage points for existing loans from May 29 to provide financial support to customers in the context of slowing production and business.
VCBS assessed that this continues to be a positive signal demonstrating the consistent policy of the State Bank in reducing the interest costs of the economy, supporting the ability of businesses and people to access capital at lower interest rates.
Positive signs appear but foreign investors are net sellers
Although the banking system’s interest rate cut has not had a positive impact on the stock market, experts still expect the VN-Index to soon improve thanks to the interest rate cut. However, there is still a factor holding back the market: foreign investors’ net selling.
VCBS has given a positive scenario, VN-Index will continue to fluctuate from 1 to 3 sessions and enter a new uptrend. VCBS recommends that investors continue to closely follow the market, and consider disbursing 20-30% for stocks that are tending to accumulate and adjust, successfully testing the resistance zone in industry groups such as securities, oil and gas, and construction.
However, VCSB still emphasized the moves of foreign investors. According to VCBS, with the market trend still unclear, foreign investors continued to increase net selling in the last session of the week with liquidity of 395 billion, focusing on selling HSG, NVL, VND.
Meanwhile, Mirae Asset Securities Company especially emphasized the foreign factor when this group unexpectedly sold net for all 5 sessions with the value of each session remaining high.
According to Mirae Asset's calculations, last week (May 22 - 26, 2023), domestic individuals bought the most with a total value of more than VND 3,796 billion, while foreign organizations sold the most last week with VND 2,354 billion.
Last week, funds were all withdrawn. In which, open-end funds such as VN-Diamond, VFMVN30, E1VFVN30 (Thailand) were the funds that sold the most with net withdrawal values of 4.1 million USD, 11.9 million USD and 6.5 million USD respectively. In the closed-end fund group, the fund group managed by Dragon Capital sold 3.5 million USD, leading this group.
According to Mirae Asset, Vietnam is one of the few countries that foreign investors are net sellers, second only to Thailand. Foreign capital is net buyers in Japan, Taiwan and South Korea.
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