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Theoretically, interest rates and stocks have an inverse relationship: when rates rise, the stock market is typically pressured. Vietnam is no exception, and policymakers have repeatedly faced periods when rate movements became extreme enough to require intervention to maintain market stability.
Two periods illustrate the strongest “confrontation” between interest rates and Vietnam’s stock market (TTCK): the global financial crisis period of 2008–2011 and the liquidity squeeze following the COVID-19 period in 2022–2023.
During 2008–2011, Vietnam faced an inflation shock alongside the U.S. financial crisis. Domestic inflation surged, at times over 20%. Lending rates then jumped to 20–25%, contributing to a record decline in the Vietnamese stock market. The VN-Index fell from a peak around 1,170 points to below 300.
In response, multiple stock market rescue measures were introduced to curb panic-driven selling. The State Securities Commission used technical interventions, including halting the floor and tightening circuit breakers. On HOSE, the circuit breaker range was narrowed from ±5% to ±1% in March 2008, while on the HAS TC (the predecessor of HNX) it was narrowed from ±10% to ±2%.
In addition, the State Capital Investment Corporation (SCIC) was instructed to buy large-cap stocks to support the index, with a rescue package of about 5 trillion dong. The objective was to provide temporary market support amid investor anxiety.
On the macro front, the government implemented a stimulus package of about USD 1 billion in 2009, including a 4% interest subsidy for working capital loans to enterprises. This helped firms sustain production and supported a stock rebound in 2009. By March 2009, the VN-Index formed a bottom near 240 and then rebounded to around 600 within more than six months.
However, the stimulus also had a side effect: inflation. The government later tightened monetary policy and cut public investment to stabilize the macroeconomy over the long term.
Another period when rates strongly affected the TTCK was 2022–2023. The phase included rapid rate hikes globally to curb inflation and a bond market collapse following major cases (Tan Hoang Minh, Van Thinh Phat). After the COVID era of cheap money, inflation and recession fears rose globally. The Fed and other central banks continued raising rates, pressuring the VND exchange rate. Domestically, liquidity bottlenecks in the real estate sector persisted, and the bond market collapsed. Deposit rates in Vietnam reached around 10–11%.
To rescue the economy and the stock market, policymakers introduced measures aimed at preventing a broader credit and corporate stress cycle. Decree 08/2023/ND-CP allowed enterprises to renegotiate bond repayments using other assets and extend maturities by up to two years. The measure helped avert a wave of bankruptcies across listed real estate firms and was described as the most important “painkiller” of the period.
Alongside this, monetary policy began to reverse. From Q2 2023, Vietnam was among the first to ease policy rates, with four consecutive cuts. The stated aim was to inject liquidity, bring deposit rates down, and encourage liquidity to flow back into the stock market.
Comparing the two periods, the 2008–2011 rescue strategy focused on supporting large public manufacturing enterprises through liquidity and stimulus to weather an external shock. By contrast, the 2022–2023 measures targeted stabilization of real estate and banks to avoid widespread cascading defaults.
Overall, the article notes that Vietnam’s rescue policies typically follow a sequence: stabilizing sentiment first, then easing liquidity, and strengthening the legal and fiscal framework. In a high-rate environment, the current government emphasizes the health of the financial system, described as the economy’s “lifeblood.”
Compared with international markets, Vietnam’s rescue approach is described as differing in priority and reaction speed. In the United States, a high-rate crisis in the 1980s involved a classic inflation-fighting approach: the Fed raised the federal funds rate to as high as 20% in 1981 to quell inflation. The policy triggered two deep recessions and a “lost decade” for the S&P 500, reflecting a strategy of tightening until inflation was tamed, even if that meant higher unemployment and a falling stock market.
At the same time, while the Fed tightened monetary policy, President Ronald Reagan implemented aggressive tax cuts and deregulation to stimulate production—described as a counter-movement of fiscal expansion against tight monetary policy.
By 2022–2024, after the COVID-era period of cheap money, the Fed raised rates at the fastest pace in history—from 0% to above 5% in just over a year—to curb inflation. Even when banks such as Silicon Valley Bank failed due to higher rates, the Fed did not immediately cut rates for fear of reigniting inflation. Instead, it established the Bank Term Funding Program to inject liquidity directly into the banking system.
The article summarizes the U.S. message as “Don’t fight the Fed”: when rates remain high, the stock market tends to purge weak firms, and recovery typically comes from productivity gains or new technology rather than rate cuts alone.
It also contrasts this with Vietnam, where the stock market is described as more sensitive to funding costs. A drop in deposit rates can quickly shift money from savings into equities, enabling faster rebounds without a full macroeconomic recovery.
Finally, the article states that the Fed is unlikely to ease policy until the U.S. economy improves, meaning pressure from Fed rates may continue to affect Vietnam’s macro environment. It argues that the best defense against rate shocks is strengthening the economy and firms’ internal health to reduce how external rate changes transmit into the stock market.
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