Rate rise knocks market off its stride

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The State Bank raised rates to a record high in two years, sharply increasing discount interest rate from 7 to 12 per cent. Refinancing and overnight interest rates both added 1 to 12 per cent.

This was the third time within three years the State Bank suddenly increased its key interest rate, squeezing further an already tightening money policy.

The Ho Chi Minh Stock Exchange’s (HoSE) VN-Index strongly dropped, loosing more than 8 points as investors rushed to bail out. At the close, the benchmark shed 4.87 points, or 1.02 per cent, to close at 470.51 points.

Decliners amounted to 193, while just 45 stocks were up and 39 ended flat. Some 30 stocks hit the floor, among them major stocks Sacomreal (SCR), Itaco (ITC) and Cotecland (CLG).

Of the blue-chips, Saigon Securities Inc. (SSI) shed 3.2 per cent, Vincom Corp. (VIC) and Bao Viet Holding (BVH) lost 2.3 per cent each, while Vinamilk (VNM) was off 1.1 per cent. Meanwhile, a number of blue-chips gained support, with Hoang Anh Gia Lai Group (HAG) advancing 4.11 per cent, Vietinbank (CTG) 2.38 per cent while Hoa Phat Group (HPG) hit the ceiling.

Foreign investors bought cheap shares today, with net buying volume reaching 776,450. The buying value, however, was VND7 billion ($338,000) lower than the selling value.

Liquidity was slightly up with 31.2 million shares worth VND737.45 billion (35.6 million) changing hands.

On the Hanoi Stock Exchange (HNX), the HNX-Index sharply dropped giving back 1.6 points (1.78 per cent) to close at 88.45 points. Liquidity hit VND445.07 billion ($21.5 million).

Some 232 stocks were down, compared with 54 up.

Foreigners, like in the southern bourse, bought cheap shares on the HNX focusing on KLS, PVS and PVX. Their net buying value reached VND13.87 billion ($670,000).