Vietnam stocks await lower interest rates despite policy support: analyst

Vietnam's stock market has yet to respond to a series of government measures aimed at expanding monetary policy flexibility and supporting economic growth, with analysts saying borrowing costs remain too high to drive a sustained recovery in investor sentiment.

The benchmark VN-Index hovered around 1,860 points in June, while trading liquidity weakened sharply. Daily turnover fell to VND16-17 trillion ($646.17 million) in many sessions, well below May's average of VND24.3 trillion.

The subdued performance came despite the government's renewed push to achieve GDP growth of at least 10% in 2026 through a range of fiscal and monetary support measures.

Vu Viet Linh, deputy head of institutional client analysis at Maybank Securities Vietnam (MSVN), said recent policy initiatives have mainly focused on giving the State Bank of Vietnam (SBV) greater flexibility in managing liquidity to support economic growth. However, implementation has remained cautious amid inflation and exchange rate pressures.

"As long as interest rates remain relatively high, the positive impact on investor sentiment will be limited," he said.

Under Resolution 168 issued recently, the government tasked the central bank with studying changes that would allow a larger share of term deposits held by the State Treasury at commercial banks to be counted as part of banks' funding base, a move intended to improve liquidity in the banking system.

Linh said the measure would give the SBV additional flexibility in liquidity management. MSVN estimates that about VND900 trillion ($34.21 billion) of State Treasury deposits are currently held outside the commercial banking system. Redirecting part of those funds into banks could significantly improve system liquidity, although the pace would depend on macroeconomic conditions.

The brokerage cautioned that the resolution merely creates a policy framework rather than requiring the full amount of Treasury deposits to be transferred to commercial banks. Future liquidity easing will still depend on inflation, exchange rate movements and global geopolitical developments.

Separately, the SBV has relaxed several prudential requirements for banks under Circular 25, raising the ceiling on the ratio of short-term funding used for medium- and long-term lending to 40% from 30% and allowing greater flexibility in the treatment of State Treasury deposits when calculating banks' loan-to-deposit ratios.

Credit rating agency S&I Ratings said the changes should ease funding pressure on lenders, particularly those with lending ratios close to regulatory limits, and help reduce competition for medium- and long-term deposits.

State-owned lenders, including BIDV, VietinBank and Vietcombank, could also benefit given their key role in financing Vietnam's public infrastructure projects, the agency said.

Analysts said the policy changes expand the central bank's room to support the banking system, but any positive impact on equities is likely to depend on a sustained decline in interest rates as well as favorable inflation and exchange rate conditions.