HÀ NỘI — Vietnamese stock markets may increase this week, on expectations that the two-day visit of the US president to Việt Nam 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 Lê Nguyệt Ánh, 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 Dũng Khánh, 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, Dũng 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 per cent on Friday to finish at 614.81 points, extending a three-day decline of 1.6 per cent. Therefore, the southern index was up only 0.7 per cent from the previous week.

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

The rate hike will result in a stronger US dollar against other currencies, including the Vietnamese đồng, which will force Việt Nam’s central bank to weaken the đồng 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 VNĐ41 to VNĐ21,918 on Friday, 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 Việt Nam (BID), insurer Bảo Việt 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.

US crude West Texas Intermediate (WTI) on Friday closed last week’s trading at US$47.75 per barrel, extending a three-day fall of 1.2 per cent, and London-traded Brent crude slashed 1.1 per cent in the last three sessions to end at $48.72 per barrel.

Both local markets traded nearly 178.3 million shares each session, worth VNĐ3.06 trillion ($136.3 million), which was a slight increase in the trading volume and trading value from the previous week. — VNS