VN-Index down 4 points despite central bank's ceiling deposit rate cut

Vietnam’s benchmark VN-Index fell 4.06 points, or 0.38%, to 1,061.79 on Wednesday, despite the State Bank of Vietnam’s ceiling deposit rate cut.

Banking stocks were the main driver of the decline of the VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), as almost all tickers closed in red.

STB of Sacombank dropped over 2%, TCB of Techcombank 1.8%, BID of BIDV 0.8%, VPB of VPBank 0.8%, and VCB of Vietcombank 0.2%.

Despite falling prices, the finance-banking group attracted a skyrocketing cash flow, about VND4.4 trillion ($187.5 million) or 31% of the total trading value in the HoSE. STB ranked second in liquidity, with VND600 billion ($25.56 million), followed by SHB of Saigon-Hanoi Bank and ACB of Asia Commercial Bank.

The major bourse of Vietnam saw improved liquidity with nearly 794 million shares changing hands for nearly VND13.8 trillion ($588 million), an increase of VND1 trillion from the previous session and the highest level in the past 1.5 months.

The VN30 index, which tracks the performance of 30 largest-cap stocks, including many in the banking group, went down 6.5 points to 1,061.55.

Foreign investors were net sellers on the HoSE for the third consecutive session to the tune of over VND570 billion ($24.28 million). They mainly net sold HPG of steel giant Hoa Phat, VNM of Vinamilk, and VND of VNDirect.

The HNX-Index on the Hanoi bourse inched up 0.17 points to 215.96, while the UpCOM-Index on the unlisted public company market fell 0.07 points to 80.93.

The State Bank of Vietnam (SBV) announced on Tuesday that it will lower the ceiling interest rates on dong-denominated deposits by another 0.5 percentage points for terms below six months from Thursday, to support economic growth. Accordingly, the deposit interest caps will be brought down from 5.5% to 5% per year.

The maximum interest rate for demand deposits and deposits of less than one month will remain at 0.5% per year. The rate for deposits of six months or more will be set by banks on the basis of market capital supply and demand.

The SBV will also lower its policy interest rates, the third cut so far this year, following those on March 15 and April 3. Accordingly, the overnight electronic interbank rate and the interest rate for loans to offset capital shortfalls in clearance between the central bank and domestic banks will decrease from 6% to 5.5% a year, while the refinancing rate will be reduced from 5.5% to 5%. However, the rediscount rate will remain unchanged at 3.5% a year.