Liquidity remains tight as geopolitical tensions persist, with VN-Index showing signs of a bottom near the MA200

Liquidity across the Vietnamese stock market remains tight as interest rates stay elevated and geopolitical risks show no clear signs of easing, keeping investor sentiment defensive. Even so, technical signals suggest the VN-Index may be forming a bottom zone.

Liquidity hits a one-year low

Market-wide liquidity fell below 15,000 trillion dong, the lowest level in a year. The decline reflects that investors are staying on the sidelines as the VN-Index hesitates, with trading activity remaining subdued.

High rates and geopolitical uncertainty weigh on sentiment

Economists and market participants point to two main pressures: higher interest rates and persistent external geopolitical concerns.

Economist Dr. Dinh The Hien said rising interest rates are a key obstacle for equities. While the VN-Index has dropped sharply from its late-February peak of around 1,900 points, the market’s price-to-earnings (P/E) ratio remains above 15x, which he said is no longer attractive.

“Compared with the 2023-2024 period, when bank savings rates for major banks (Vietcombank, BIDV, Agribank, VietinBank) were around 5% per year and market P/E around 13-14x, interest rates have risen significantly. Vietcombank’s 1-year time deposit rate has risen to 7.9% per year, making the stock market less attractive relative to the risk-free rate,” he analyzed.

In practice, investor sentiment in trading forums appears cautious. Many investors say they reduce trading or shift toward savings deposits when rates are in the 7%-9% per year range.

Ms. Lan Phuong (Hanoi) said her portfolio is about 25% down, mainly in banking, securities, and real estate stocks. She said she has no intention to buy more to “lift prices,” instead keeping funds in bank savings deposits to earn high interest.

Other investors also cite geopolitical risk. Some said prolonged Middle East tensions could push oil prices higher, potentially pressuring inflation and weighing on the stock market.

Mr. Nguyen Tan Phong, a Pinetree Securities analyst, added that foreign selling has continued since the start of 2026, suggesting the near-term market upgrade has not yet had a clear impact. He said the VN-Index appears to be driven more by global macro fluctuations than domestic factors.

Short-term pressures may be cyclical

Despite the current defensive tone, several experts argue that factors such as geopolitical tensions and interest-rate movements are cyclical and mainly affect the market in the short term.

Mr. Nguyen Thanh Trung, CEO of FinSuccess Investment, said geopolitical risks in Iran or rapid rate hikes affect the market only in the short term, with forecasts suggesting these pressures may ease in Q2 or later this year.

“Although market P/E is not cheap, it remains attractive in the long term. Double-digit growth in the next 3-5 years, coupled with supportive fiscal and monetary policy, will be the drivers for a strong market recovery,” Trung said.

Mr. Huynh Anh Huy, Director of Equity Market Analysis at Kafi Securities, agreed that such factors have short-term impacts. He said the sustainable growth driver for Vietnam’s stock market is the shift from a speculative market toward a more transparent, modern capital market, enabling enterprises to mobilize long-term funds at costs lower than bank credit.

He also pointed to Vietnam’s growth outlook. With Vietnam targeting double-digit GDP growth in 2026-2030, financing needs are expected to be a key factor. The Finance Ministry estimates total capital needs at about 38.5 quadrillion dong. The state budget can cover only about 20% (over 7.7 quadrillion dong), leaving more than 80%—equivalent to over 30 quadrillion dong—to be mobilized from the capital market, with the stock market playing an increasingly important role.

Technical outlook: rebound attempts, neutral medium-term trend

Technically, the VN-Index is described as moving in a short-term rebound supported by the MA5 line. The index is currently above MA200 (around 1,660 points) but still below MA50 (around 1,770 points), indicating a neutral medium-term trend for 1–6 months.

Vietcap Securities presented a positive scenario with a 60% probability, in which the VN-Index is likely to form a mid-term bottom around MA200 at 1,660 points. The index could then resume a slow, prudent rebound depending on signals from international markets.

In a clearer improvement in external conditions—such as progress in Middle East negotiations, easing oil prices, and U.S. stocks surpassing MA200—Vietcap said the VN-Index could break through the resistance zone at 1,765–1,770 points in 2–3 weeks, before targeting around 1,830 points in April.

Separately, VDSC forecasts the VN-Index will trade in a short-to-mid term range of 1,584 to 2,042 points.