A liquidity channel attracting more funds than equities in the short term

Stock market liquidity in recent sessions has remained subdued, reflecting a cautious mood dominating capital flows. The average daily traded value in the week of March 30 to April 3 on HOSE stood at about 20.3 trillion VND, significantly below the 20-session average. After a period of sharp volatility, many investors have tended to stay on the sidelines rather than deploying funds in the stock market, partly due to caution amid external uncertainties, particularly tensions in the Middle East.

Liquidity stays weak as investors wait for clearer signals

In discussing the liquidity trend, Mr. Nguyen Trong Dinh Tam, Director of the Investment Advisory Division at Thien Viet Securities (TVS), said the market’s short-term caution is reflected in low trading value per session compared with early 2026. From a money-flow perspective, TVS noted that if capital has not returned strongly to equities, one reason is that alternative investment channels have become more attractive in the near term—especially bank deposits.

TVS attributed the appeal of deposits to rising deposit rates across several tenors since late 2025, which has improved returns on idle funds. The rise in deposit rates is linked to competition for funds among commercial banks, while the system’s loan-to-deposit ratio (LDR) has remained high since last year. At the same time, the economy’s capital needs continue to expand toward a double-digit GDP growth target in 2026, adding pressure on interest rates.

Valuation reset and potential policy tailwinds

Despite the near-term liquidity softness, Mr. Tam said he remains positive about stock investments in the medium term. Many stocks have adjusted meaningfully in recent times, pushing the price-to-book ratio well below the five-year average. This, in TVS’s view, may create opportunities for buy-and-hold investors or those with a longer horizon.

Beyond valuations, the stock market could also benefit from a potential upgrade in FTSE Russell’s classification, as well as the impact of government-backed policies to boost economic development implemented since early 2026 (including Resolution 79-NQ/TW and Decree 57/2026/ND-CP).

Oil price increases drive inflation concerns

TVS identified a key factor driving investor sentiment: liquidity has declined sharply, with the rise in crude oil prices being a major variable. Oil prices have moved higher since the start of 2026 amid growing geopolitical tensions between the US and Iran, and have strengthened further in the past month as hostilities escalated.

As of the week ended March 30 to April 3, Brent crude traded around 109 USD per barrel—near the year’s high for 2026 and up more than 50% since the onset of Israel-US operations in Iran. The increase has quickly transmitted to domestic price levels, with global oil prices and shipping costs lifting Vietnam’s fuel prices.

Data from the Statistics Bureau – Ministry of Finance showed that March gasoline prices rose 29.7% month on month, while the diesel price index increased by more than 57%. As a result, the transportation component of Vietnam’s CPI rose by 12.85% in March, the largest contributor to the 1.23% monthly CPI increase in March 2026.

Impact on stocks: higher costs and tighter policy constraints

According to TVS, the relatively rapid expansion of inflation is a major factor affecting stock market moves. The pressure is coming from two directions: investors are concerned about business outlook as input costs rise, while the State Bank may have less room to ease monetary policy to support market stability.

The market also faces energy-security concerns if the Middle East conflict persists, which could tighten global oil and gas supplies. TVS, however, said these risks are partly mitigated by proactive steps from policymakers, including flexible use of the Stabilization Fund to cool fuel prices, adjusting tax rates in the pricing formula toward zero dong per liter, and increasing negotiations and signing energy contracts with suppliers, including Russia.