10.06.2021, 22:27

Market wrap: Large caps weigh on VN-Index

Market wrap: Large caps weigh on VN-Index

The VN-Index dipped seven tenths of a percent on Thursday with 21 of the VN30 Index’s 30 components falling as investors remain cautious about the recent congestion issues affecting the HOSE trading system.

  • VIC (-1.9%) fell to a 10-week low and was the top contributor to the day’s loss. Moreover, Vingroup subsidiaries VHM (-1.9%) and VRE (-2.8%) dropped.
  • Most banks continued to decrease, including BID (-3.4%), CTG (-2.0%), TCB (-1.4%)
    and MBB (-1.7%).
  • GAS (-1.5%) slumped for the fourth consecutive session.
  • On the positive side, VNM (+3.5%), HPG (+2.6%) and SAB (+2.0%) were the day’s top
    three contributing gainers.
  • VCI (+7.0%) soared to the daily trading ceiling, reaching an all-time high.
G-bond issuance reached an eight-month high in May

G-bond issuance value jumped 68% MoM to VND44.2tn (USD1.9bn) in May — the highest level in eight months. The surge in G-bond issuance was attributed to (1) a strong increase in the offered amount (the Vietnam State Treasury (VST) offered VND48tn/USD2.1bn of G-bonds) and (2) high demand for reinvestment (VND33.4tn/USD1.45bn of G-bonds came due in May). In 5M 2021, the VST issued VND109.7tn (USD4.8bn) of G-bonds, fulfilling 31.3% of FY2021’s target.

VCSC estimates around VND102.6tn (USD4.5bn) of G-bonds expired in 5M 2021, leading to a net issuance of VND7.1tn (USD310mn) vs a net issuance of VND800bn (USD35mn) in the same period last year.

Meanwhile, total trading value in the secondary market rose 7.8% MoM to VND211.0tn (USD9.1bn) in May. In 5M 2021, trading activity in the secondary market improved 12.5% YoY.

In secondary market, yields of five-year and longer tenors inched down, with 5Y and 10Y yields quoted at 1.18% (-5 bps MoM) and 2.29% (-12 bps MoM), respectively. In contrast, yields of shorter tenors rose inched up, with the 3Y yield quoted at 0.89% as of May 31 (+12 bps MoM).

After eight consecutive months of recording net inflows in the secondary market, foreign investors net sold VND775bn (USD33.7mn) of bonds in May. In 5M 2021, foreign investors net bought VND5.9tn (USD254mn) vs net outflows of VND460bn (USD20mn) in 5M 2020.

Interbank rates increased further on stronger credit growth

Interbank interest rates continued to rise in May as the fast pace of credit growth curbed excess liquidity in the banking system. According to the State Bank of Vietnam (SBV), credit growth (from the end of 2020) reached to 4.67% as of May 21 — much higher than 2% growth recorded in the same period last year.

At the end of May, ON and 1W interbank interest rates quoted at 1.18% (+63 bps MoM) and 1.33% (+60 bps MoM), respectively.

The dong remained strong against the USD amid the depreciation of the greenback

Thanks to solid foreign inflows, the dong was broadly stable against the USD during the month, quoting at 23,048 in the interbank market as of May 31.

On June 8, the SBV reduced its buying price for USD via six-month forward contracts by VND150 to VND22,975 from VND23,125. Also, banks are no longer allowed to cancel these forward contracts. Following the SBV’s decision, the USD/VND exchange rate declined to around 22,955 on June 8 (the VND has appreciated 0.6% against USD since the beginning of the year).

@ VCSC


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