Stock almost remained stable in March. In April, Vietnam stock began with a session but dropped slightly.
That market has fluctuated with small amplitude and low liquidity in recent times shows many investors believe this is the bottom of the market occurring when the price of stocks are low and sellers no longer want to sell at lower price again. On a technical analysis perspective, the market tends to accumulate and hardly have the probability of a low decrease. However, it is unlikely for the possibility of finance short term breakthroughs in index since demand is low due to certain market trouble.
Gasoline increase has great impact on inflation and manufacturing situation of some profession. This increase will make CPI of April go up to 0.4% and CPI of whole month reach 1% more. In the future, it is hard for gasoline price to go down since if global price increases, then as “market mechanism”, domestic price will go high as well. In contrast, if global price falls, export tax for gasoline can recover. Since, in the recent time, export price is 0% and 40% for maximum, gasoline decrease for retail is impossible
Worry for inflation causes State Bank to continue tightening monetary policy in the context of having liquidity stress in banking system, when previously, on 03/08/2011, State Bank has raised discount rate from 7% to 12%. On 03/31/2011, State Bank issued Decision No. 692/QD-NHNN, under which interest rates for refinancing and overnight loans to commercial banks increasing to 13%. With three times increase in two months, the refinancing interest rate today only 2% less than their peak of 15% in May 6 / 2008. Banks strained with the race to raise interest rates for short term and no term limitation up to the ceiling. There is information showing that real interest rates of some banks have been up to 17-18% per year due to the implicit cost of capital raising when the monetary policy is tightened.
Furthermore, after a strong move to adjust exchange rates to over 9%, and a strong reduction on foreign trade showed that investors are worried because of the instability of macroeconomic policies. With the major contribution to the demand when they bought in 2010 and early 2011, a decline in activities of foreign investment will affect the market
Thus, the most positive point in recent time is investors today have not "interest" in the sale of stocks due to the deep fall and in the low price. The bottom signal appearance will draw investors to make bottom surfing or investors in capital would consider the capital increase to hold base shares. But with strong moves in the promulgation of macroeconomic policies to curb inflation by the government, it is forecasted that the stock market will continue to stay “unstable" and walked accumulation process can be extended to few months.
For more information about stock and investment please contact VIPC Capital Management at ngan.nguyen@vietpartnersplus.com
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