Cash returns to Vietnamese stock market, but analysts urge caution

Vietnam’s stock market staged a sharp rebound on Tuesday, snapping a five-session losing streak as cash returned to the market, but analysts cautioned that short-term risks remain.

The VN-Index rose 33.17 points to 1,679.18, with gainers outnumbering losers by 253 to 66. Liquidity on the Ho Chi Minh City Stock Exchange (HoSE) reached VND23.36 trillion ($886.2 million), up nearly 25% from the previous session and the highest level in about a month.

Analysts said the recovery followed easing concerns over system liquidity, interest rates and currency pressures, which had weighed on investor sentiment in recent weeks.

Nguyen The Minh, head of retail client analysis at Yuanta Securities Vietnam, said domestic investors had been cautious amid fears of a correction in Vingroup-related stocks, tighter liquidity as interbank and deposit rates rose, and signals from the U.S. Federal Reserve that it may cut rates only once more in 2026.

“As interbank rates and the free-market exchange rate cooled, investor sentiment improved, activating strong cash inflows, particularly in the Tuesday afternoon session,” Minh said.

Despite the rebound, concerns persist that the State Bank of Vietnam could tighten monetary policy. Minh said the recent rise in deposit and interbank rates was largely technical, driven by strong year-end credit demand, aggressive lending by smaller banks, and reduced institutional deposits.

“These are technical factors,” he said, adding that U.S. dollar deposit rates are trending lower and could fall further if the Fed continues easing, allowing banks to tap international bond issuance to ease funding pressure.

Economist Dinh The Hien said heavy public investment and large projects aimed at boosting growth in 2026 could slow capital turnover, leaving cash tight despite rising credit and budget spending. While exports remain strong, domestic exporters have limited surpluses, he said, forcing banks to raise deposits.

He expects savings rates in 2026 to rise to 5-6%, up 0.5-1 percentage point, with corporate lending rates increasing by about 0.5 percentage points for strong manufacturers and 1-3 percentage points for average firms.

Tran Hoang Son, head of market strategy at VPBankS Research, said easing interbank rates could support liquidity, but warned the VN-Index would struggle to break resistance at 1,770-1,800 this month given current trading volumes.

“The market could improve early next year as credit demand slows from early 2026, interbank rates ease, and Fed rate cuts help narrow the VND-USD interest rate gap, supporting the exchange rate,” Son said.

Still, analysts urged caution. Minh said short-term trading strategies would be difficult, warning the index could retest its November lows. “Investors should remain defensive, though not necessarily liquidate their entire portfolios,” he said, recommending partial de-risking to safer levels.

For longer-term investors with a one-year horizon, Minh said current levels could be suitable for gradual buying, as recent declines were largely sentiment-driven and did not alter long-term fundamentals.

Hien echoed the cautious view, saying Vietnam’s stock market in 2026 would be challenging and require careful stock selection, with interest rates likely to create divergence across sectors.

“Higher rates will pressure listed manufacturing firms and affect market momentum,” he said. “But overall, I still expect the market to perform well in 2026, with opportunities in quality stocks that have yet to rise, particularly outside financials, banking and real estate.”