Silicon Valley Bank meltdown to have little impact on Vietnam market: top broker

The collapse of Silicon Valley Bank (SVB) in the U.S. last week is unlikely to cause systemic risks to Asian markets, including Vietnam, due to China's stable recovery, according to securities company VNDirect.

The U.S. Federal Reserve (Fed) may reconsider implementing aggressive interest rate hikes amid the SVB crisis, according to the Vietnamese broker.

The Fed terminal rate is expected to peak at 5-5.25%, which is lower than the projected level of 5.5-5.75% prior to the SVB crisis. The Fed is also expected to start reducing its policy interest rate in the fourth quarter of this year instead of the first quarter of 2024.

Also according to VNDirect, the Chinese economy’s stable recovery will help minimize risks in Asia. China's real estate market has left its toughest period behind as its home trading volume started to grow in February.

Asian stock markets generally reacted to the crisis relatively "calmly" on Tuesday, VNDirect commented. A weaker U.S. dollar following the SVB collapse is a positive factor for emerging countries, it added.

For the Vietnamese stock market, the firm maintains a cautious view for the first half of 2023. The Vietnamese government’s fresh Resolution 33 underlines debt restructuring for real estate developers, one of the most anticipated moves expected in Vietnam.

Foreign capital inflows from exchange-traded funds (ETFs), estimated at VND4 trillion ($170 million), are expected to enter Vietnam in the coming time - another positive factor.

“We still think that in the first half of 2023, the VN-Index uptrend will be quite fragile and unstable amid low liquidity, interest rate and forex rate pressure, and the current test for companies facing the burden of payments for maturing bonds. Therefore, investors need to be very careful using leverage,” the brokerage house said.