Liquidity declines as valuations remain insufficiently cheap, keeping investment capital cautious in the near term

A two-week ceasefire between the United States and Iran has become fragile, and the United States has announced a blockade of the Hormuz Strait. Brent crude prices have continued to rise as the conflict disrupts oil flows and related products from returning to meaningful supply levels.

SGI Capital said the disruption scenario that could lead to a supply shortage is becoming more evident than initially expected. If no comprehensive agreement is reached soon, Brent trading above $90 per barrel would weigh on inflation and the growth outlook.

Oil, inflation and central-bank expectations

Alongside the conflict, the expected pause of half of AI data center investment this year due to skyrocketing costs is also expected to temper profit growth for the S&P 500 in 2026.

The bond market is signaling higher interest rates, reflecting inflation pressure linked to supply disruptions. With inflation rising again while unemployment remains low, SGI Capital noted that the Fed and other central banks may be more cautious about cutting rates, drawing on lessons from 2022.

Risk-off positioning and emerging-market outflows

Risks of instability and higher rates are pushing investors toward defensive allocations. This has included selling off risky assets and increasing USD holdings, with the strong dollar and persistently high rates acting as headwinds for emerging markets.

Foreign investors posted near-record net outflows in emerging markets last month, particularly in Asia markets that depend on Middle East oil supply. In Vietnam, foreign investors sold nearly 17.5 trillion dong on HOSE in March and more than 32 trillion dong year-to-date.

SGI Capital added that risk-off capital has withdrawn very strongly from risky assets, pushing short-term indicators into oversold territory across major stock markets and making a rebound likely when positive news from Iran developments or oil prices emerges. However, the firm warned that the downtrend in rate cuts over the past two years has ended, creating a risk of reversal if inflation rises again.

Trade policy risk under Section 301

In March, the U.S. Trade Commission initiated Section 301 investigations against 16 trading partners. Hearings are expected in early May 2026, with a final decision due by July 2026. SGI Capital noted that tariffs under Section 301 will not be limited by rate or duration, making it a structural factor for global trade and capital flows.

Countries with large and rising trade surpluses with the United States, including Vietnam, are expected to be a focus of the investigations.

Vietnam fund flows and market liquidity

FiinTrade data showed net fund outflows increased in March 2026 to over 5.4 trillion dong, up 59% from February 2026. Outflows were concentrated in equity funds and ETFs.

In March 2026, the trend of reducing cash exposure resurfaced in most open-end equity funds (20 out of 36 funds) after cash was cut in February. The shift reflects increased caution as the VN-Index fell by about 11% versus the previous month.

The cash tilt increased primarily in large funds with NAV around 5–8 trillion dong, while smaller funds reduced cash allocations. The pattern was observed in funds including DCDS and VINACAPITAL-VMEEF, which reportedly mobilized nearly 197 billion dong and 111 billion dong in March 2026.

Market liquidity for the whole market last week reached 26,523 billion dong, down 2.6% week-on-week. Matched liquidity rose 0.5% to 22,650 billion dong. Since the start of April, market-wide liquidity reached 27,145 billion dong, down 20% versus March 2026 but up 6% versus April 2025.