After falling to the deepest low of 366.02 points on June 20, 2008, the stock market recovered strongly, reaching the highest peak of 489.83 points on July 17 before falling again as soon as the Ministry of Finance announced the petrol price increase. Experts talk about the impacts of the petrol price increase on the stock market’s performance.


Nguyen Dinh Phong, Service and Investment Director of VNDirect Securities Company


Petroleum products make up 3% of the basket of commodities for calculating consumer price index (CPI), so it is understandable why the petrol price increase has had immediate influence on the VN Index. In the longer term, the petrol price hike will affect all kinds of commodities as it makes production costs higher, and stock investors well understand the principle.


Experts believe that the 30% petrol price hike is high enough to pull the VN Index down to 300 points, and I don’t think they have exaggerated, especially as the confidence of investors has been shaken in this unstable period.


However, I think that it does not make sense to give forecasts about the VN Index at this moment, because we can only give exact predictions with stable parameters, while the business environment of companies and the investment environment of investors are not stable.


Tran Hoai Phuong, General Director of Gia Quyen Securities Company


The petrol price hike will influence the stock market in two aspects. First, the fuel price increase will directly affect the production and business of transport companies and the fields that use a lot of fuel, and will indirectly make the production costs of other production fields higher. And second, the price hike will dishearten stock investors.


In theory, enterprises can raise sale prices to cover expenses. However, as the government is prioritising the task of fighting inflation, enterprises cannot determine sale price increases themselves. Therefore, the price increase will affect the profit of enterprises depending on the fuel-use level.


It is clear that the stock market’s performance depends on the psychology of investors, while this in turn depends on the figures on inflation and macroeconomy. However, I can say that some business fields will bear less influence, including hotel and office leasing.


Nguyen Van Dung, General Director of Tan Viet Securities Company


It is clear that the petrol price hike has directly influenced the psychology of stock investors. The difficulties of the national economy have not been resolved yet; the inflation rate is rising, while worries about economic uncertainties still exist. All these factors will make the stock market’s performance unpredictable. Investors should purchase shares of companies which have good business results and low P/E.


Phan Huu Huynh, General Director of IBS Securities Company


The fact that the VN Index has decreased after three weeks of continuously rising should be seen as the necessity of the market. The petrol price hike shocked many people, but it was foreseeable. The inflation rate, consumer price index and bank interest rate will increase in the time to come as a result of the petrol price hike, which also means that the stock market will still face a lot of difficulties.


Nham Ha Hai, Director of Analysis Division under FPT Capital


The stock market had just recovered after a sharp fall when the petrol price hike was announced. While confidence in the stock market had not been restored yet, they heard more bad news. Therefore, a lot of experts have predicted a worse situation for the stock market. However, I think that the stock market will not fall so sharply and deeply as it did last time.


There are two reasons for the conclusion. First, the pressure from banks selling mortgaged shares to take back capital is not as big as it was last time. Second, the stock market has attracted a lot of new investors. The investors make investments with their own money, not with borrowed money; therefore, they do not have to sell stocks out at any price to take back capital for paying debts.


Even while the market is falling, investment opportunities still exist, but it is more difficult for investors to choose commodities to purchase. I think that investors should only eye share items which have a P/E at below 10.