VN-Index loses 31 points in week of US interest rate hike

Vietnam’s benchmark VN-Index decreased to the area close to 1,200 points at the end of this week, down 31 points following the U.S. Federal Reserve’s mid-week interest rate hike of 75 percentage points.

Right after the Fed decision, the State Bank of Vietnam raised Friday the deposit rate ceiling, refinance rate and rediscount rate for the first time in two years.

The VN-Index struggled during the week.

The index plunged in the first session of the week with a drop of nearly 29 points. Prominent were decreases in sectors like securities, steel, fertilizer, and industrial real estate.

During the following sessions, the index was up and down interchangeably, with low liquidity. In the last session of the week, insurance stocks became a bright spot, making a spectacular comeback as the biggest gainer after the State Bank’s regulatory interest rate hikes.

The VN-Index, which represents Ho Chi Minh Stock Exchange (HoSE), closed the week at 1,203.28, down 30.75 points or 2.5%. The HNX-Index of Hanoi Stock Exchange (HNX) dropped 8.44 points (-3.1%) to 264.44.

Trading value on HoSE decreased by 6.3% compared to last week to VND60,535 billion ($2.55 billion), with more than 2.4 billion shares changing hands. Similarly, trading value on the HNX decreased by 10.5% on last week to VND6,579 billion ($277.5 million), and 317 million shares were traded.

In terms of influence, Vietcombank’s VCB, VHM of Vinhomes, VPB of VPBank, Techcombank’s TCB, and Masan Group’s MSN were the tickers with the most negative impacts during the week. VCB alone made the VN-Index drop nearly five points.

Meanwhile, GAS of PVGas, Bao Viet Holdings’ BVH, VNM of Vinamilk, and SAB of Saigon Beer and Beverages Co. were the ones with the most positive impacts, but their contributions were not significant.

This week, foreign investors continued to be net sellers on both HoSE and HNX, with a net value of nearly VND366 billion ($15.44 million).

Broker SHS forecast that in the medium term, the VN-Index would still be in a downtrend compared to the peak of 1,520-1,528 points this April, and the 1,295-point climax in August.

From a long-term perspective, the market is still accumulating on the basis of valuations that are low compared to the average of the past five years, according to the firm.

Vietcombank Securities predicted that in a positive case, the VN-Index would remain in the 1,200 point area. If selling pressure continues to increase, it is likely the index would drop to the support area of 1,180-1.190 points.

The firm recommends investors stay cautious and limit early bottom-fishing when the market has no signal of bottom-making and no new trend is clear. At the same time, it is advisable to restructure the portfolio, increase the proportion of cash, and retain a 30% maximum rate in stocks.