Shares soar after interest rate cut

Investors monitor the electronic board at Saigon Securities Inc. -VNS Photo Truong Vi

The State Bank of Viet Nam yesterday announced a cut in the ceiling deposit rate from 8 per cent to 7.5 per annum, refinancing rates from 9 per cent to 8 per cent and the discount rate from 7 per cent to 6 per cent.

According to stock analysts, investors have been anticipating such a move for several days, particularly after some commercial banks had cut their one-month deposit rate to 7.5 per cent per annum.

"An interest rate cut means the savings channel will be less attractive than the securities channel," said Pham Viet Hung, a Ha Noi-based independent analyst.

Blue chips led the market uptrend with the leading role of property developer Vingroup (VIC), up 2.3 per cent; and dairy giant Vinamilk (VNM), up 1.8 per cent.

Twenty four of the 30 largest shares on the HCM City Stock Exchange posted gains, lifting the benchmark VN-Index by 0.73 per cent to a close of 493.57 points, while the VN30 was up higher by 1.26 per cent at 561.81 points.

Liquidity on the market was still modest, however, with just 38.3 million shares, worth almost VND909 billion (US$43.3 million), changing hands, down 30 per cent in volume and 10 per cent in value from the previous session.

Tan Tao Investment Industry (ITA) reclaimed the position of the most active code on the bourse with 1.6 million shares traded, but the shares closed down 1.4 per cent to VND7,200 a share.

On the Ha Noi Stock Exchange, the HNX-Index also rose 0.31 per cent to finish yesterday's session at 61.12 points.

Trading value was low at over VND250 billion ($11.9 million).

Sai Gon-Ha Noi Bank (SHB) was still the most heavily-traded stock on the northern bourse with nearly 6 million shares changing hands, closing up 3 per cent at VND6,900 a share.

Foreign investors also increased their buys on the HCM City market, picking up a net buy worth VND58.7 billion ($2.8 million), but they were net sellers on the Ha Noi bourse, responsible for a modest net sell of VND278 million ($13,200) worth of shares.