With greater liquidity, investors would look for markets deemed safe with less negative impacts from the Covid-19 epidemic.
The Federal Reserve (Fed)’s decision on Sunday to lower its benchmark interest rates to 0 – 0.25% from the previous target range of 1 – 1.25% could present an opportunity for Vietnam’s stock market, according to a report by BIDV Training and Research Institute.
Illustrative photo. |
The report suggests with greater liquidity as a result of such move, investors would look for markets deemed safe with less negative impacts from the Covid-19 epidemic.
“Vietnam’s efficient solutions to prevent the spread of the epidemic, coupled with drastic measures from the government in supporting economic development and improving the business environment could be attractive to investors,” stated the report.
On the other hand, growing uncertainties surrounding the epidemic is proving to be a stumbling block for the recovery of Vietnam’s and other stock markets all over the world, especially as bad news related to the epidemic dampens investor sentiment.
Therefore, the realization of the “dual target” of containing the Covid-19 epidemic and maintaining high economic growth under the request of Prime Minister Nguyen Xuan Phuc, along with timely measures to stabilize market sentiment and improve the business environment, are key driving forces for Vietnam’s stock market this year.
Meanwhile, the institute's report said the Fed’s rate cut and similar actions from major central banks around the world are putting pressure on Vietnam's central bank to follow suit. However, lower interest rates at the moment do not provide much support, assessed the report's authors, adding what people and the business community need at the moment is support for liquidity, not to mention the delay effect of rate cuts.
The current high inflationary pressure makes the decision to lower interest rate a tricky one. In the first two months of 2020, Vietnam's consumer price index (CPI) rose 5.91% year-on-year, the highest two-month growth rate over the last seven years and above the full-year target of 4%.
Moreover, a lower interest rate would not have much effect on new loans as the economy’s capacity to absorb capital remains week, with credit growth in the January – February period climbing a modest 0.1% year-on-year, significantly lower than the growth rate of 0.85% recorded in the same period last year.
In another assessment, BIDV expected Fed’s recent move would pose no significant impacts on the USD/VND exchange rate. While a cheaper greenback could relieve pressure on the USD/VND, psychological factors could offset such the effect.
Other News
- Vietnam's non-cash payments reach US$9.8 trillion, 23 times GDP
- PM urges Central bank to ensure positive growth in 2024
- Vietnamese Gov't to continue VAT cut for second half of 2024
- 3,400 taels of gold purchased at the first-in-11-year auction
- HoSE to launch KRX-developed transaction system in early May
- Central bank moves gold auction to tomorrow
- Vietnam’s c.bank sells USD to stabilize exchange rate
- Central bank to auction gold to calm domestic market
- Vietnam's Central Bank ready to steady foreign exchange market
- Finance ministry clears bottlenecks to pave way for stock market upgrade
Trending
-
New strategies needed to attract and retain talents
-
Vietnam news in brief - May 21
-
PM urges Vietnamese adults to donate organs
-
Vietnam’s wine market to reach US$167B in 2027
-
Walking tour to experience public arts in the heart of Hanoi
-
Propaganda poster contests launched for Hanoi’s 70th liberation anniversary
-
Bas-reliefs on Hue's nine dynastic urns listed as UNESCO heritage
-
Hanoi's oldest book street preserving the city's reading culture
-
Private investors: Key to build more parking lots in Hanoi