Interest rates increase sharply, which scenario for VN-Index?

After the Fed announced an interest rate increase, a series of central banks in many countries, including Vietnam, also raised interest rates to fight inflation or stabilize exchange rates. However, experts believe that these developments will not have a big impact on Vietnam’s stock market.

As reported, for the first time in 2 years, the State Bank of Vietnam (SBV) has decided to raise a series of operating interest rates including ceiling deposit rates, rediscount interest rates, and refinancing rates. Specifically, from September 23, the ceiling interest rate for term deposits from 1 month to less than 6 months will increase by 1 percentage point to 5% per year. Particularly, people’s credit funds and microfinance institutions apply the maximum interest rate for term deposits from 1 month to less than 6 months at 5.5% per year.

For demand deposits with terms of less than 1 month, the ceiling interest rate was raised from 0.2% to 0.5% per year. Besides, two other types of operating interest rates include refinancing rate; rediscount also increased by 1 percentage point, to 5% a year and 3.5% a year, respectively. In addition, the interest rate for overnight loans in interbank electronic payments and loans to cover capital shortfalls in clearing payments of the State Bank with credit institutions increased from 5% to 6% per annum. five.

This move comes after the US Federal Reserve (Fed) raised interest rates by 75 basis points for the third time in a row to cool down inflation in the US. The US reference interest rate is currently in the range of 3% – 3.25%, the highest level since the global financial crisis in 2008.

Notably, the Fed also forecasts that the average reference interest rate in the US will be adjusted to 4.4% this year and 4.6% next year, before falling to 2.9% in 2025.

Reacting to this forecast of the Fed, major stock markets all dropped sharply. In the US, the main indexes Dow Jones, S&P 500, Nasdaq closed on September 21, all down more than 1.7%.

As for the Vietnamese market, reacting to the above information, Vn-Index once lost the 1,200 point mark in the morning session of September 22. However, the active bottom-fishing cash flow helped the main index recover and surpass reference.

Closing session on September 22, VN-Index stopped at 1,214.7 points, increased by more than 4 points or 0.34%, HNX-Index increased by 0.55 points to 265.64 points and UPCoM-Index increased by 0.32 points. to 88.55 points. Liquidity on HoSE improved significantly but remained low, total trading value reached 11,667 billion dong, up 19% compared to the previous session, of which matched value reached 10,187 billion dong.

Although it has recovered significantly after a deep dip in the session on September 22, many investors wondered that in the environment of rising interest rates, expected profits for the stock market would be difficult to outperform.

Talking to Nhadautu.vn on this issue, Mr. Nguyen The Minh, Analysis Director of Yuanta Securities Vietnam said that before that, the SBV also moved to raise interest rates, because it was difficult for Vietnam to keep interest rates. low in the context of the Fed continuously raising interest rates, putting pressure on the exchange rate.

“In general, this move will not have much impact on market sentiment. The risk has been reduced, so short-term investors can stop selling and still hold the proportion of stocks at 30-35% of the portfolio. , and at the same time observe more developments to find the appropriate disbursement point”, Mr. Minh recommended.

According to Mr. Nguyen Anh Khoa, Head of Agriseco Research Investment Advisory and Analysis Department, the SBV’s increase in operating interest rates is a reasonable move at this time and will not have a great impact on the stock market. The reason is that the SBV’s goal is to control money supply and inflation. In the past, raising interest rates did not affect securities much.

“In the next 1 month, the market is still positive when it is prepared to receive positive information such as Q3 GDP, profit growth of industry groups, investors can disburse into industries such as retail, construction”, forecast expert Agriseco Research.

Assessing the impact of interest rate hikes, Dragon Capital believes that Vietnam’s stock market will have many fluctuations depending on developments in the world. However, the influence of external factors on Vietnam is much lower than that of emerging countries and is not systematic.

The pro-market factor is pricing. It is estimated that the P/E valuation of the VN-Index will return to about 12.1 times after reflecting the third quarter business results. This valuation is less than twice the standard deviation of the P/E ratio over the past 5 years.

“History shows that investors often lose their long-term goals to short-term fluctuations and come back when the market has recovered or has been very hot. Therefore, the expected return is no longer attractive. We believe that investors still persistently pursue the set financial plan”, the report of Dragon Capital wrote.

For its part, in a recent report, VNDirect said that the above action of the State Bank of Vietnam is relatively drastic and timely in the face of rapid changes in the international financial market. However, the increase of 1 percentage point in the operating interest rate is higher than the previous forecast at 0.5 percentage point for 2022. After this rate hike, the analyst team believes that there is little chance of a rate hike. another hike in operating interest rates in 2022.

According to Khanh An

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