March 23 (Bloomberg) -- Vietnam’s stocks rose, with the benchmark index posting the biggest gain in Asia, after the State Bank of Vietnam ordered the country’s top four banks to reduce lending rates.
The Ho Chi Minh City Stock Exchange’s VN Index increased 1.9 percent, the most since March 5, to close at 454.10. The gauge slid 27 percent last year, the biggest decline among major Asian indexes, as interest-rate increases to combat accelerating inflation hurt economic growth and corporate earnings.
The central bank instructed five lenders in total, including Vietnam Bank for Agriculture & Rural Development, the country’s biggest lender, Vietnam Joint Stock Commercial Bank for Industry and Trade and Bank for Investment and Development to cut lending interest rates, according to a statement posted on its website late yesterday.
The banks are required to come up with specific cuts before April 10, it said. Banks are currently charging lending rates as high as 25 percent, according a weekly report posted on the central bank’s website yesterday.
“This is quite positive for companies,” Nguyen Minh Hung, deputy chief analyst at Ho Chi Minh City-based Dai Viet Securities, said by phone today. “It shows that the government is taking drastic measures to push down interest rates in the market to help businesses,”
Vietnam Joint Stock Commercial Bank for Industry & Trade, the country’s second-largest publicly traded bank by market value, increased 1.2 percent to 26,000 dong. Bao Viet Holdings, the biggest insurer, jumped 4.3 percent to 72,500 dong. Vietnam Dairy Products Joint-Stock Co., known as Vinamilk, rose 4.9 percent to 96,000 dong.
“Traders also expect inflation to slow this month, as big cities like Hanoi and Ho Chi Minh City reported prices easing in March,” Hung said. Inflation slowed for a sixth month in February to 16.44 percent, after peaking at 23.02 percent in August.
To contact the reporter on this story: Nguyen Dieu Tu Uyen in Hanoi at firstname.lastname@example.org
To contact the editor responsible for this story: Nick Heath at email@example.com