Illustration image: A man walks out of a Techcombank branch in Hanoi. (Source: VNA)
Vietnamese shares declined on September 28 on both local exchanges after the State Bank of Vietnam reduced the saving interest rate for US dollar saving accounts, which hurt bank shares.

The benchmark VN Index on the HCM Stock Exchange on September 28 dropped nearly one percent to close at 564.88 points. The HNX Index on the Hanoi Stock Exchange lost 0.7 percent to finish at 78.15 points, ending an eight-day winning streak that saw the index jump 2.7 percent.

The State Bank of Vietnam on September 28 cut the dollar saving interest rate from 0.75 percent to 0.25 percent for individuals and from 0.25 percent to 0 percent for businesses.

The central bank said that its move aimed to ease pressure to devalue the Vietnamese dong, after China's sharply weakened its currency recently and the US central bank plans to raise the interest rates later this year.

Since the beginning of this year, Vietnam's central bank has depreciated the dong by five percent against the dollar.

"Money may flow towards the securities market or the property market or even gold," Do Thien Anh Tuan, lecturer of the Fulbright Economics Teaching Programme, told vnexpress.net website. "However, the switch should not be large."

However, brokerage VNDirect Securities JSC wrote in its report that the move could also make foreign investors withdraw their money from local financial markets.

Following the central bank's move, the banking sector fell 1.9 percent – the most declining one among 23 sectors on the stock market - with all of the nine listed banks down.

Vietcombank (VCB) lost 2.3 percent, the Bank for Investment and Development of Vietnam (BID) was down 2 percent and Vietinbank (CTG) dropped 1.5 percent.

In addition, the energy sector also contributed to the market's decline as it fell 1.8 percent after US crude benchmark West Texas Intermediate on September 28 fell 0.9 percent from September 25 and traded at 45.28 USD a barrel.

None of listed energy stocks gained. Petrovietnam Gas Corp (GAS) lost 2.5 percent and Petrovietnam Drilling & Well Services (PVD) dropped 2 percent.

Insurancer Bao Viet Holdings (BVH) lost one percent and brokerage Saigon Securities Incorporate (SSI) dropped 2.5 percent.

Total 117 million shares were traded on the two local markets on September 28, worth 1.82 trillion VND (81 million USD), a decrease of 18 percent from September 25.

FIT Investment Joint Stock Company (FIT) was the most active stock on the market with more than 3.5 million shares being traded and fell 4 percent during September 28 session.-VNA