Vietnam's stocks fell the most in Asia on concern corporate earnings growth will slow after the government cut its target for the economy's expansion this year.
The benchmark VN Index on the Ho Chi Minh City Stock Exchange on Monday lost 0.7 percent to 419.53 at the 11:30 a.m. local-time break. The gauge slid 4.2 percent in the second quarter, the biggest quarterly decline since the three months ended Dec. 30.
Vietnam's central bank cut interest rates on June 29 after the statistics office reported gross domestic product rose 4.66 percent in the three months through June from a year earlier. The government reduced its target for GDP growth of as much as 6.5 percent in 2012 to 6 percent, while Do Thuc, general director of the statistics office, said the full-year expansion may be 5.4 percent to 5.7 percent.
"While GDP growth in the second quarter improved compared to the first quarter, the improvement was marginal, hence not enough to convince investors that corporate earnings will grow substantially," said Attila Vajda, a broker at ACB Securities Ltd., the country's third-largest brokerage.
The central bank announced on June 29 that it would lower the refinance rate and discount rate by one percentage point to 10 percent and 8 percent respectively, starting July 1 as it seeks to spur growth. The nation has entered a period of sluggish growth, the World Bank said in a report last month that cited the slow pace of structural reforms and inefficiencies in state-owned companies, banks and public investments.
The economy expanded 4.38 percent in the first half of the year, down from 5.63 percent a year earlier, according to the statistics office. Vietnam was hit by many difficulties in 2010 and 2011, and conditions "became even more difficult in the first half of this year," according to Do Thuc.
Vietnam Dairy Products Joint-Stock Co., or Vinamilk, fell 1.7 percent to VND86,500, poised for the biggest drop since March 27.