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Bonds post worst week since April as stocks surge
Vietnam’s benchmark bonds dropped the most this week since April on speculation investors were shifting money into higher-yielding equities after the country’s stock market surge.
The VN-Index of shares climbed 6.5 percent from the close of trading on June 5, rounding out a seventh weekly gain that was the longest winning streak since April 2006.
“Rallies in stocks have sucked investment from bonds, which had very little trading as investors expected the government to raise interest rates after a series of debt auction failures,” said Nguyen Lam Dung, Chief Executive Officer of Hanoi-based Habubank Securities, the brokerage unit of Hanoi Building Commercial Joint Stock Bank.
The yield on the government’s five-year note rose eight basis points this week to 9.23 percent, according to a daily fixing price from about ten banks compiled by Bloomberg.
The State Treasury didn’t sell any of the dong-denominated bonds offered at auctions over the past three months, even as the government allowed the Treasury to increase coupon rates, according to the Hanoi Securities Trading Center.
The dong was trading at 17,794 to the dollar at 3:45 p.m. Friday, as against 17,783 the day before, according to data compiled by Bloomberg.
This was despite investors selling the greenback following cuts in dollar deposit rates. The maximum rate on bank dollar deposits was lowered from 2.65 percent to 1.5 percent from Monday.
thanhnien, bloomberg
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