Vietnam VN-Index Rises After Rate Cuts

That matters because Vietnam’s equity cycle has historically been tightly linked to the direction of borrowing costs. During 2020-2021, when rates fell sharply, the VN-Index climbed toward 1,500 points and daily turnover reached 30 trillion-40 trillion dong. In 2022 and early 2023, when deposit rates were pushed up to as high as 9%-9.5%, the index sank to around 1,000 points. The latest decline in rates has therefore been enough to reset expectations that had been depressed by tight credit conditions, especially for companies sensitive to financing costs such as property developers, brokers, builders and industrial landlords.

But the market is not yet behaving like a confirmed bull phase. Lê Thanh Tùng, head of investment advisory at VPS Securities, said it was too early to call a new uptrend because the key question is not whether rates have been cut, but whether those cuts are implemented widely and effectively enough to improve balance sheets, margins and cash flow. He said the recent rebound still looks like a short-term recovery, not the kind of broad-based advance usually seen in a sustained upcycle.

That caution matters for investors because equity valuations can quickly outrun fundamentals when a policy easing story takes hold. If the expected benefit from cheaper credit does not show up in earnings, the market risks reversing part of the rally as hopes get priced out. The danger is especially relevant in a market where many stocks are only bouncing from deep lows rather than breaking to new highs. Tùng noted that many names in steel, seafood and ports have rallied, but few have reached 52-week highs or shown the kind of leadership that typically confirms a strong trend.

The macro backdrop also complicates the case for a lasting risk rally. He pointed to elevated oil prices, sticky US inflation and the possibility that the Federal Reserve keeps rates higher for longer, especially if Middle East tensions remain elevated. That keeps global funding conditions less supportive than the local rate cuts alone might suggest. In other words, Vietnam’s easing cycle is helpful, but it is not operating in a vacuum.

For now, the more defensible narrative is that lower rates have opened the door to a tactical rebound in Vietnamese equities, with a possible rotation into beaten-down cyclical and domestic demand plays. Tùng said short-term traders may still favor industrial parks, construction, public investment and fertilizer names on pullbacks rather than chasing strength. A broader and more durable rally would likely require not just more banks cutting lending rates, but visible transmission into loan growth, profit recovery and stronger market leadership.

The next test is whether the current bounce expands beyond relief buying and into a self-sustaining advance backed by earnings. If credit costs keep falling and operating results start to improve, the VN-Index could build a stronger base. If not, the move risks remaining what it looks like today: a policy-led rally still searching for confirmation.