That is the opinion of Mr. Dinh Quang Hinh, Head of Macro and Market Strategy Department, Analysis Division, VNDIRECT Securities Joint Stock Company (VNDIRECT).
Many impacts on the stock market
According to Mr. Dinh Quang Hinh, in the sessions of May 22 and 23, a number of commercial banks sought liquidity support from the State Bank of Vietnam (SBV) with the winning bid volume on the OMO lending channel continuously at a high level.
"Along with that, the State Bank also increased the OMO interest rate to 4.5%/year, an increase of 25 basis points compared to before. This will have an immediate impact on the stock market," Mr. Hinh commented.
Mr. Hinh also said that short-term risks are increasing as the market receives unexpected information both domestically and internationally.
Specifically, US macro data released last week, including the services Purchasing Managers' Index (PMI), manufacturing PMI, and higher-than-expected unemployment claims, show that the US economic growth outlook remains strong.
This raised concerns that the US Federal Reserve (Fed) will continue to delay cutting its key interest rate. Expectations for the Fed to cut its key interest rate at its September meeting have dropped to 51%, compared to 68% the previous week. This development led to a sharp correction in US stock indexes on Thursday.
“Domestically, despite the intervention efforts of the State Bank of Vietnam (SBV), the exchange rate pressure has not cooled down. According to some sources, the SBV had to sell 3.5 billion USD to stabilize the market, plus the gold bar auction has sucked a large amount of liquidity from the market. This has caused the liquidity in the system to no longer be as abundant as before and the interbank overnight interest rate has exceeded the 5% threshold,” said Mr. Hinh.
The above information has had an immediate impact on the stock market as this is a channel that is “sensitive” to interest rates. Given the emerging signs of risk, it is necessary for investors to re-evaluate the current status of their investment portfolio, and to prioritize risk management.
Accordingly, for traders (short-term traders) who are using leverage (margin) or holding a high proportion of stocks, it is necessary to take advantage of technical recovery phases to reduce their positions, reduce the proportion of stocks to a safe level to manage portfolio risks.
For long-term investors, it is possible to continue holding stocks that have not reached their target price. However, they should not rush to buy but need to patiently observe supply and demand, market developments in the coming sessions, waiting for more attractive buying points to disburse. The nearest support level of VN-INDEX is the 1,250 point area and the further support level is around 1,220 points.
The stock market received unexpected information. (Illustration photo).
According to Mr. Hinh, last week, the VN-Index faced strong selling pressure at the old peak, falling again after 4 weeks of increasing points. The main index fell more than 19 points at the end of the week when the overnight interbank interest rate skyrocketed and exceeded the 5% mark, reflecting that liquidity in the system was no longer as abundant as in the previous period.
Volatile market
Mr. Dinh Quang Hinh commented that the Vietnamese stock market traded relatively positively in the first session of the week (May 20) when the VN-Index increased by nearly 5 points with BCM and NTP hitting the ceiling price before the information that the State Capital Investment Corporation (SCIC) announced that it would divest capital from these two enterprises.
According to Mr. Hinh, in the trading session on May 21, the VN-Index fluctuated for most of the trading time before closing down slightly by 0.4 points. Investors' cautious sentiment occurred in the context of the State Bank of Vietnam (SBV) taking actions to support the exchange rate by listing the central exchange rate at 24,251 VND/USD, up 4 VND compared to the beginning of the week, and at the same time organizing an auction of SJC gold bars to narrow the gap between domestic and world gold prices.
Profit-taking pressure caused the VN-Index to fall more than 10 points in the session on May 22, with the banking group falling 1.3% in the context of the State Bank increasing OMO and treasury bill interest rates to support the exchange rate.
VN-Index jumped 14 points on May 23, highlighted by demand for the insurance industry as investors expected the prospect of interest rate hikes to benefit this industry.
However, negative sentiment pulled the market down more than 19 points at the end of the week (May 24) when overnight interbank interest rates skyrocketed and exceeded the 5.0% mark, reflecting that liquidity in the system was no longer as abundant as in the previous period and some commercial banks sought liquidity support from the State Bank of Vietnam with the winning bid volume on the OMO lending channel continuously at a high level.
In addition, the fact that the US recorded a higher-than-expected PMI index also made investors worry about the possibility of the Fed lowering interest rates this year, causing the Dollar Index (DXY) to increase, putting pressure on the VND exchange rate.
At the end of the week, VN-Index decreased by 0.9% to 1,261.9 points. HNX-Index was almost unchanged at 241.7 points and UPCOM-Index increased by 1.4% to 94.4 points.
This week, GAS (+4.4%; HVN (+12.6%) and PLX (+8.0%) were the main factors supporting the market. On the contrary, VCB (-1.7%); VIC (-4.1%) and TCB (-3.8%) put pressure on the general index. Liquidity continued to increase with the trading value on the 3 floors reaching VND27,670 billion/session (+37.6% compared to the previous week) and foreign investors net sold nearly VND6,000 billion during the week.
Source: https://vtcnews.vn/tang-lai-suat-cho-vay-kenh-omo-tac-dong-manh-len-thi-truong-chung-khoan-ar873420.html
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