Savings deposit rates rise toward 9–10% annually, drawing funds away from stocks and weighing on the VN-Index.

Saving deposit rates have surged to around 8–10% per year, drawing substantial inflows and prompting some investors to consider moving money out of the stock market. As bank deposit yields approach expected equity returns, pressure on the VN-Index and market liquidity has become more evident.

Deposit rates rise and compete directly with equities

Since the start of the year, typical deposit rates have increased from about 7% to near 8% per year, with many banks offering rates at or above this level. Promotional offers and bonus interest programs have also been expanded, pushing the maximum yield on the market toward the double digits or to levels close to it.

Dragon Viet Securities (VDSC) said deposit rates are resuming an upward trend after a period of sustained lows that lasted from last year. The brokerage noted that while deposit rates have risen sharply at many banks since the start of the year (by 1–3 percentage points per year on six-month to medium-term tenors), deposit growth rose only 0.8%, while credit grew 1.4% in the first two months of 2026. This suggests a continuing gap between the supply and demand for funds.

To narrow this gap, deposit rates are likely to keep rising in the short term, at least in the first half of this year, before the LDR stabilizes to support balance for rates.

Higher risk-free yields reduce the equity risk premium

One of the clearest effects of higher rates is increased competition with stock market returns. When the risk-free rate rises, equities generally need to offer higher returns to attract investors.

For example, if bank deposit rates are at 9% per year, an investor would weigh whether stock investment is worthwhile if expected returns are only around 10–12%. In such a case, the risk premium can become too small, encouraging some investors to withdraw from the stock market.

Vietnam’s market has seen similar dynamics before. In 2022–2023, when deposit rates rose sharply, many stocks with still-strong growth failed to attract funds.

Examples from past periods

FPT, a technology sector representative with solid fundamentals, recorded price growth of about 15–20% in a year. However, when savings rates at times reached 9–10% per year, the relative advantage of equities became less compelling, particularly given short-term price volatility.

MWG (Thegioididong) also saw rebounds of 10–15% in a difficult market. Still, these gains were not enough to fully compensate for the risk when bank rates were high and domestic demand was weak, leading investors to stay on the sidelines rather than chase a bottom.

Liquidity pressure and VN-Index near-term challenges

As savings rates become more attractive, many individual investors may shift funds from stocks to banks for more stable, lower-risk yields. This can create selling pressure in the stock market, reduce liquidity, and make it harder for stock prices to sustain gains.

Money has also become more cautious with the stock market channel in recent times. Last week, liquidity weakened, with weekly turnover hovering below the 20-session average; some days recorded turnover below 20 trillion dong. Combined with foreign net selling pressure, the VN-Index—despite a technical rebound—has struggled to form a sustainable near-term uptrend.

Expert views: near-term caution, longer-term support

Market experts said that in an environment of rising inflation and tightening monetary policy in many countries, including Vietnam, the interest-rate variable is likely to have a significant influence on the stock market.

However, in the long term, Mr. Pham The Anh, a board member of MBS and head of the Macroeconomics Department at the National Economics University, and a member of the Economic Committee’s advisory team, assessed that Vietnam still has ample growth headroom and strong long-term growth prospects.

He also pointed to near-term momentum from major government investment projects in infrastructure, energy, and urban development, which could support the capital market overall and the stock market in particular.

In addition, Vietnam’s market-upgrade prospects remain on track. External factors such as U.S. tariff policy are expected to ease compared with earlier periods, in a context where rising living costs make it harder for the U.S. to sustain high tariffs for an extended period.

Cash flow expectations through September and beyond

Regarding cash flow from now to September, Mr. Dinh Minh Tri, Head of Personal Client Analytics at Mirae Asset Securities (MAS), said cash flow is likely to move in two phases.

Phase one (March to September): active funds are expected to disburse capital into eligible stocks according to the index framework, with a focus on large-cap stocks. This phase typically reflects early expectations, with price appreciation leading the official information.

Phase two (around the upgrade date expected 21/9/2026): index-tracking funds must buy to maintain portfolio weights, with estimated fund inflows reaching over 500 million USD.

Recommended approach: moderate deployment and risk control

In the current context, experts recommended a strategy of moderate deployment, prioritizing Bluechip and VN30 stocks to reduce risk and to capture potential fund inflows when the market stabilizes. They also suggested focusing on sectors less affected by external factors such as construction materials, construction, and essential consumption.

Overall, the guidance emphasized balancing defensive and flexible positioning, focusing on capital preservation, maintaining liquidity, and gradually taking opportunities when more attractive price levels appear.