An investor on the Bao Viet Securities Corp’s trading platform (Source: VNA)
Hanoi (VNA) - Vietnamese stock markets may increase this week, on expectations that the three-day visit of the US President to Vietnam will boost investor confidence, analysts said.

“This is the only good news that can improve investor confidence, as it stresses a good relationship between the two countries and brings more opportunities for both economies, such as the finalisation of the Trans Pacific Partnership (TPP),” said Le Nguyet Anh, Asia Commercial Bank Securities Corp’s Head of Market Analysis.

This is the best news at the moment, as investors are worried about the economy due to bad debts, public debts and increasing fuel prices, noted Phan Dung Khanh, Maybank KimEng Securities Corp’s Head of Market Analysis.

The coming visit by President Obama could have positive effects on the markets, as in the past, particularly in 2006 when the VN Index rose above 650 points, which is also the target for the southern index this year, Dung added.

Low investor confidence sent local market indices down in the last three sessions, amid fears that the US central bank will raise interest rates in June – which would be the second rate hike since December.

The benchmark VN Index on the HCM Stock Exchange fell 0.7 percent on May 20 to finish at 614.81 points, extending a three-day decline of 1.6 percent. Therefore, the southern index was up only 0.7 percent from the previous week.

The HNX Index on the Hanoi Stock Exchange inched down 0.1 percent to end at 81.75 points, for a loss of 0.6 percent during the last three sessions. The northern index added 0.6 percent during the week.

The rate hike will result in a stronger US dollar against other currencies, including the Vietnamese dong, which will force Vietnam’s central bank to weaken the dong in order to protect local markets, as a stronger dollar may reduce investors’ profits in local assets and investors may withdraw their investments from the country.

Last week, the daily reference mid-point rate set by the central bank for dollar trading in local banks jumped 41 VND to 21,918 VND on May 20, especially after the US central bank announced that a possible rate hike might occur in June.

Meanwhile, low investor confidence has pulled financial stocks down, including banks and insurance companies, and especially blue chips such as Vietcombank (VCB), Vietinbank (CTG), the Bank for Investment and Development of Vietnam (BID), insurer Bao Viet Holdings (BVH) and BIDV Insurance Corp (BIC).

However, analysts warned investors not to count too heavily on the visit of the US president, as the visit may only have short-term impacts on stocks because market conditions are now different from the past and macroeconomic factors, such as the TPP, will not be finalised in the near future.

Additionally, energy stocks may also affect investor confidence, as they could suffer from a three-day decline in oil prices.

Both local markets traded nearly 178.3 million shares each session, worth 3.06 trillion VND (136.3 million USD), which was a slight increase in the trading volume and trading value from the previous week.-VNA