Viet Nam's stock market gears up for bullish second half of 2023, fuelled by lower interest rates and government support

August 23, 2023 - 15:20
The Vietnamese government has taken new measures to ensure the economy remains one of the fastest growing in the world. The country aims to reinforce the strength of the export driven manufacturing sector and a vibrant domestic market.

Traders in the Vietnamese market are looking at the remaining quarters this year with optimism. Holding positions in various equities and derivatives is about constant management and tuning to ensure optimum results. There are multiple options in the stock market as the economy looks to recover from the global slowdown three years ago.

 The options have different profiles depending on your level of capital and risk appetite. You could be a conservative investor taking the cautious approach or an active investor considering whether cfd trading is high risk or not along with the other options in the derivatives market. All forms of trading require macro-economic data, and news of an interest rate cut can be a significant development in making projections.

 The State Bank of Vietnam announced an interest rate cut on June 16 by 50 basis to cushion the country’s economy. This announcement means the interbank lending rate stands at 5 per cent while the refinance rate is at 4.5 per cent. Viet Nam’s government urged the central bank to take urgent measures to support businesses and spur economic growth.

 Rate cuts became a popular move in the post 2008-crash decade for central banks as access to cheap cash was necessary for manufacturers and businesses in boosting commerce. In the US and the EU, this policy got the phrase quantitative easing to refer to the government’s push to ensure there is more and cheaper cash circulating in the economy.

 Analysts anticipate that increased government support will be vital for the economy. The government has deployed a raft of support policies to ensure that the economy does not slow further with Viet Nam looking to become an economic giant in the region.

 The expectation for a 7 per cent interest rate growth can become a reality if these measures provide the boost the government intends. Major economies like the US began to raise interest rates again as inflation rates rose, but the same could be over with the FED looking to avoid recession.

 Viet Nam’s central bank intends to have further cash flow into the economy, which could encourage more investors to boost activity and return to the market. Such building of robust portfolios is crucial when anticipating growth. 

 A high interest rate in the US could mean that recession is not out of the picture. The US is a massive economy and provides a market to manufacturing hubs like Viet Nam. Therefore, even though the Vietnamese economy could be recovering, a slowdown in the US has global ramifications.

 The Vietnamese economy can have a strong close to the year. An improvement in the export sector and better business results for major companies are vital to this process. Government incentives look to spur this action from the economy for the coming months.

 The Central Bank has provided business leaders the tools to ignite economic recovery. Easier and cheaper access to cash is vital for manufacturers looking to scale up operations and churn out more goods. The interest rate cut plays a decisive role in providing the spark necessary for growth. Vietnamese investors will be tracking economic indicators for the results of these initiatives.