Vietnam stocks surged, driving the benchmark index to a two-year high on mounting speculation the central bank will cut interest rates to spur economic growth.
The Ho Chi Minh City Stock Exchange’s VN Index (VNINDEX) rose 1.2 percent, the most among Asian benchmark gauges tracked by Bloomberg, to 497.58 as of 10:34 a.m. local time. The index is poised for its highest close since Feb. 18, 2011. Vietnam Dairy Products Joint-Stock Co. (VNM), the nation’s biggest listed dairy producer, surged 2.7 percent to a record, while Masan Group Co. (MSN) jumped 3.1 percent.
The VN Index has climbed 3.5 percent the past three days after online newswire CafeF reported March 20 that consumer prices in Hanoi and Ho Chi Minh City dropped 0.21 and 0.29 percent respectively in March versus February. The State Bank of Vietnam cut the refinancing rate and discount rate by one percentage point on Dec. 24.
“As inflation slows in the two biggest cities, inflation for the nation would be slow this month, giving more room for the central bank to cut interest rates further,” Giang Trung Kien, Hanoi-based head of research at FPT Securities Joint-Stock Co., said by phone today. News that commercial lenders have lowered dong deposit rates also drove the rate-cut rumors, Kien said.
Vietnamese lenders including Joint-Stock Bank for Foreign Trade of Vietnam and Saigon Thuong Tin Commercial Joint-Stock Bank cut dong deposit rates to as low as 7.5 percent, Tuoi Tre newspaper reported yesterday, without saying where it got the information.
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