Stock market reacts to the rise of interest rate

VCN - The State Bank's adjustment of interest rates in the market has affected the stock market. Along with some developments in the world financial market, the stock market has continuously dropped since State Bank announced the rise of interest rates. Therefore, according to experts, investors need to be calm and select the correct information to invest in the current context.
The stock market fell after adjustments in the interest rate market. Photo: Nguyễn Hiền
The stock market fell after adjustments in the interest rate market. Photo: Nguyễn Hiền

Negative volatility

After the Federal Reserve System (FED) decided to raise the introductory interest rate by 0.75 percentage points on September 21, the central banks of many countries moved to raise interest rates to control inflation and protect the local currency. Under tremendous pressure from the world macro context, in Vietnam, from September 23, the State Bank of Vietnam also decided to raise points for a series of critical operating interest rates. Rising interest rates caused the world stock market to decline. Moreover, after the interest rates rose by FED, major global stock markets simultaneously dropped points.

Vietnam's stock market is no exception. In that situation, cash flow is more difficult to access, and investors' psychology is affected. The VN-Index has decreased continuously; even the support zone of 1,100 points has been penetrated. The market had many dropping sessions in the last week of September. Entering October, the stock market witnessed struggling sessions, but the market's movements were still in a negative trend. Ending the first week of October, in the trading session on October 7, the market witnessed the plummet of VN-Index with a decrease of 39 points, stopping at approximately 1,036 points. The HNX-Index fell 8.04 points (3.84%) to 226.09 points, and the UPCoM-Index dropped 2.43 points (2.95%) to 79.98 points.

Talking about concerns in the market, Mrs Ho Nguyen Thuy Tien, Director of the Individual Clients Division at Rong Viet Securities, noted interest rate hikes. According to Mrs Ho Nguyen Thuy Tien, policy operators are facing the need to stabilize the exchange rate and control inflation in Vietnam. Therefore, the State Bank has decided to increase the operating interest rate by 1% with the supplying capital interest rate from 4% to 5% and the rediscount interest rate from 2.5% to 3.5%. However, raising interest rates conflicts with Vietnam's policy of promoting economic growth, which was set out at the beginning and is still emphasized today. Along with that, the world economy is coping with the European food and gas crisis, high inflation in the US, problems in China, political tensions, and the Fed raising interest rates.

"I think those are worrying issues in the market right now when cheap money is no longer available, interest rates rise, politics escalate... making the stock market's sentiment quite strong," Mrs Tien said.

Regarding the impact of raising the interest rate on the profits of listed companies, Mr Quan Trong Thanh, Director of Maybank Investment Bank's Analysis Division, said that the average total profit forecast of enterprises in 2022 was about 25 % which was still achievable. Therefore, the impact of the increase in the interest rate on businesses was not too significant. However, it would reduce the profit of the whole market by 3-5%. The industries that maintain high growth rates were, firstly, the retail and banking industries. It is forecasted that the banking industry will maintain a good growth rate of about 25%-30% because the bank could still ensure the credit growth rate if comparing this period with the previous period, in addition to the fact that they can regulate profits through the reserve fund.

Carefully monitor market movements

The stock market is always sensitive and moving forward, so entering the period of rising interest rates, according to experts, in the short term from the next three to six months when the market faces big stories such as exchange rate pressure, interest rate increase, the market will be pending, not participating drastically right away, while those holding stocks are also very impatient.

Mr Quan Trong Thanh, Director of the Analysis Division of Maybank Investment Bank, said that the most favourable scenario was that after this interest rate adjustment, the market price or VN-Index would go sideways, not creating a solid trend yet. However, according to experts of Maybank Investment Bank, business activities would have EPS growth, which means that earnings per share would continue to increase, and at some point, the valuation would drop to a superficial level. If, looking at the long-term perspective and Vietnam's economy was still in a recovery trend, Vietnamese businesses still had enough strength to go through this period within the next 12 months, then this was a good time to invest.

Meanwhile, Mr Tran Thang Long, Director of Analysis, BIDV Securities Joint Stock Company (BSC), said that, up to now, the global stock market's movements were quite bad and going down. However, the market was still weak. On the other hand, Vietnam's stock market was luckier because during the Covid-19 pandemic, we did not have to cut interest rates drastically or implement an easy monetary policy, so there was still room for growth. Therefore, with the efforts of the Government, the National Assembly of Vietnam, and our "room" policies, were still there, Vietnam would still be an essential and attractive destination for domestic and international investors.

After interest rates are adjusted to rising, investment opportunities may be quite bright in the long term, but many people think it will be difficult in terms of short-term investment opportunities. Accordingly, experts said that investors should pay attention and carefully monitor market movements. Let us seize the opportunity if there are adjustments to reasonable valuation and profitability levels. As for the investment prospects of industry groups, it is challenging to choose in the short term because market sentiment changes rapidly. However, in the long term, from the next six months to one year, stocks related to public investment that have dropped recently are an opportunity for investors to accumulate. Besides that, the industry group related to industrial parks is also quite promising when the occupancy rate of Vietnam's industrial parks has reached extremely high levels, and rents price has increased by more than 15%.

Experts also noted that the stock market was a susceptible market to information. As long as some disturbing information appears, it could greatly affect the market and cause strong fluctuations. Therefore, to be able to determine a good stock price, investors need to have a stable, calm mentality and select the correct information to be able to make optimal and more accurate investment decisions.

By Hoài Anh/Thanh Thuy

Related News

How to stabilize the gold market?

How to stabilize the gold market?

VCN - Is the gold auction solution effective enough to stabilize the market, while many other factors need to be taken into account such as transparency, preventing price manipulation... In addition, it is also necessary to think about other monetary solutions including raising interest rates because a higher interest rate environment will cool both gold and exchange rates.
Sustainable economic development from international cooperation in finance, accounting and auditing

Sustainable economic development from international cooperation in finance, accounting and auditing

VCN – The cooperation promotion among countries in the fields of finance, accounting and auditing not only improves the efficiency of financial management and resource sharing but also facilitate economic development, said by Deputy Minister of Finance Vo Thanh Hung.
Improve processes and enhance experience to rebuild trust in life insurance

Improve processes and enhance experience to rebuild trust in life insurance

VCN - In Vietnam, the space and potential of the life insurance industry is still very large, so it is necessary to focus on implementing new solutions, improving product quality, and helping the market develop sustainably.
Completely resolve problems and accelerate public investment disbursement

Completely resolve problems and accelerate public investment disbursement

VCN - In the first 4 months of 2024, the disbursement of public investment capital reached 17.46% of the plan assigned by the Prime Minister, higher than 15.65% in the same period last year. However, to further speed up this work, the Ministry of Finance believed that it needed to urgently overcome problems that have existed for a long time, especially in key projects.

Latest News

Developing State budget estimates for 2025: carefully taking factors increasing, decreasing and shifting revenues into account

Developing State budget estimates for 2025: carefully taking factors increasing, decreasing and shifting revenues into account

VCN - The Ministry of Finance is developing a circular guiding the development of state budget estimates for 2025 and the 3-year state budget and financial plan for the 2025-2027 period; 5-year financial plan for the 2026-2030 period.
Ministry of Finance proposes seven solutions for combating tax evation for e-commerce

Ministry of Finance proposes seven solutions for combating tax evation for e-commerce

VCN - Vietnam e-commerce will reach US$30.5 billion in 2035 hence according to Minister of Finance Ho Duc Phoc, it will pose challenges to the management of tax, quality of goods, and anti-fraud.
Banks are ready to deploy biometric authentication

Banks are ready to deploy biometric authentication

VCN - According to Decision No. 2345/QD-NHNN dated December 18, 2023 of the State Bank, which will take effect from July 1, money transfer transactions over 10 million VND/time or over 20 million VND/day will require facial authentication. Accordingly, banks are urgently preparing to be ready to implement new regulations within the set deadline.
Review the tax payment of sales livestream individuals

Review the tax payment of sales livestream individuals

VCN - The General Department of Taxation has just issued an official letter directing local tax departments to drastically manage e-commerce taxes and electronic invoices generated from cash registers.

More News

13 cases subject to direct tax registration with Tax authority

13 cases subject to direct tax registration with Tax authority

VCN – The Ministry of Finance collects comments on a draft Circular guiding tax registration to replace Circular 105/2020/TT-BTC. According to the draft, if the National Population Database
Ministry of Finance: Focusing on improving independent audits

Ministry of Finance: Focusing on improving independent audits

VCN - According to Minister of Finance Ho Duc Phoc, in recent times, the Ministry of Finance has focused on improving the quality of independent audits through training, inspection, and examination.
Digitizing the process, banks actively lend online

Digitizing the process, banks actively lend online

VCN - Many banks promote online lending to save time and costs for both parties and creating conditions to promote credit growth.
The finance sector

The finance sector's firm stance on combating tax evasion in e-commerce

VCN - Addressing and clarifying some opinions raised by National Assembly deputies during the questioning session on issues related to the commerce and industry sectors on the afternoon of June 4, Minister of Finance Ho Duc Phoc stated that in the coming period, the finance sector would rigorously enforce tax collection on e-commerce to ensure fairness in the fulfillment of taxpayers' obligations.
Total State revenue managed by Tax sector is estimated at VND767,415 billion

Total State revenue managed by Tax sector is estimated at VND767,415 billion

VCN – The total state revenue in the first five months of 2024 managed by the Tax authority is estimated at VND 767,415 billion, meeting 51.6% of the target and 114.9% year-on-year.
Tax sector cooperate with Police agency to prevent fraud of tax invoice

Tax sector cooperate with Police agency to prevent fraud of tax invoice

VCN - Over the years, the acts of law violation on electronic tax invoices took place complicatedly with many different tricks. To prevent fraud, the tax sector has applied several drastic measures, including strengthening cooperation with the Police agency.
Over 4.49 billion USD raised through G-bond auctions in five months

Over 4.49 billion USD raised through G-bond auctions in five months

The State Treasury mobilised more than 127 trillion VND (4.49 billion USD) from G-bond auctions on the Hanoi Stock Exchange (HNX), or 31.76% of the annual plan.
Five-month budget revenue reached half of the whole year 2024 revenue estimate

Five-month budget revenue reached half of the whole year 2024 revenue estimate

VCN - According to the Ministry of Finance, in May 2024, total state budget revenue is estimated to reach VND150.9 trillion. In the first five months of 2024, total budget revenue is estimated to reach VND898.4 trillion, equal to 52.8 percent of the estimate.
Bank savings of individual customers recover while institutional savings decline

Bank savings of individual customers recover while institutional savings decline

Deposits of individual customers at banks have increased again since February this year, after declining in January, the latest statistics from the State Bank of Vietnam (SBV) showed.
Read More

Your care

Latest Most read
Developing State budget estimates for 2025: carefully taking factors increasing, decreasing and shifting revenues into account

Developing State budget estimates for 2025: carefully taking factors increasing, decreasing and shifting revenues into account

VCN - The Ministry of Finance is developing a circular guiding the development of state budget estimates for 2025 and the 3-year state budget and financial plan for the 2025-2027 period; 5-year financial plan for the 2026-2030 period.
Ministry of Finance proposes seven solutions for combating tax evation for e-commerce

Ministry of Finance proposes seven solutions for combating tax evation for e-commerce

Vietnam e-commerce will reach US$30.5 billion in 2035 hence according to Minister of Finance Ho Duc Phoc, it will pose challenges to the management of tax, quality of goods, and anti-fraud.
Banks are ready to deploy biometric authentication

Banks are ready to deploy biometric authentication

VCN - VPBank recommends that, to avoid transaction interruptions, customers proactively update their account information according to their chip-embedded citizen identification card before July 1.
Review the tax payment of sales livestream individuals

Review the tax payment of sales livestream individuals

The General Department of Taxation has just issued an official letter directing local tax departments to drastically manage e-commerce taxes and electronic invoices generated from cash registers.
13 cases subject to direct tax registration with Tax authority

13 cases subject to direct tax registration with Tax authority

VCN - Notably, Article 4 of the draft Circular stipulates that taxpayers subject to direct tax registration with tax authorities include: taxpayers subject to tax registration through the interconnected single-window mechanism; Taxpayers subject to direct
Mobile Version