A customer conducts a transaction at a bank office in Hà Nội. — VNA/VNS Photo

HÀ NỘI — As the financial landscape in Việt Nam evolves, the end of the low-interest era appears imminent. While this shift does not necessarily indicate a tightening of monetary policy, it underscores the need for cautious investment strategies as the market confronts new realities.

In recent trading sessions, the stock market has faced notable declines, coinciding with sharp increases in short-term interbank interest rates, which have spiked into double digits.

The overnight interbank rate, accounting for over 90 per cent of transaction value, has seen sudden spikes, rising by 7.9 percentage points to hit 17 per cent per annum, a rare high in recent years.

Such dramatic changes have fuelled investor anxiety, contributing to expectations that the VN-Index will continue its downward trajectory, with many stocks facing adjustment pressures.

Investment advisers from major securities firms have sought to allay these concerns, emphasising that the rising interbank rates primarily reflect short-term liquidity needs as Tết (Lunar New Year) approaches and do not directly affect deposit or lending rates for businesses, which more strongly influence the stock and real estate markets.

Experts suggest that while short-term fluctuations can affect market sentiment, longer-term needs for capital, especially for public investment, remain robust.

They anticipate that interbank rates will stabilise after the holiday period, despite current pressures.

The significant capital demands in the economy are driven by infrastructure investment and, as such, even with higher rates, the need for cash will likely prompt liquidity support from the State Bank of Vietnam (SBV).

From December 2025 onwards, liquidity pressures began to surface more clearly within the banking system, prompting an unspoken increase in interest rates as nearly 40 banks concurrently raised their rates, with some offering over 8 per cent for longer-term deposits and approaching 9 per cent in select cases.

Analysts from the investment community have pointed out that rising interest rates present a primary risk for the stock market in 2026.

According to MBS Securities, the average interest rate on 12-month deposits may rise by an additional 50 basis points this year, driven by widening gaps between deposit growth and credit growth at commercial banks.

Concerns over high non-performing loans and the ongoing challenge of matching short-term deposits with long-term funding needs also loom large.

Currently, over 80 per cent of bank deposits are made for terms under six months, while the demand for long-term financing, especially for infrastructure projects, is increasingly urgent.

Despite these challenges, MBS maintains a positive outlook for the stock market in the first half of 2026, forecasting that the market benchmark VN-Index could approach 1,860 points.

However, as the year progresses, with a new interest rate environment taking shape, market dynamics are expected to shift, with liquidity potentially decreasing as investment flows into less liquid assets like gold, the US dollar and real estate.

Investors are advised to be prudent and focus on stocks with clear profit growth and solid financial foundations, said MBS.

According to VNDirect Securities, the Vietnamese financial landscape is entering a new phase as average deposit interest rates are projected to rise by 0.5–1 per cent per annum due to increased liquidity pressures from credit and public investment.

While these changes could create market anxiety, many experts do not anticipate significant rate hikes. Instead, adjustments are expected to be moderate, as the SBV balances macroeconomic stability and growth support.

Securities firms are notifying clients of impending increases in margin lending rates, which are expected as firms rely heavily on loans for funding. As these rates have climbed, outstanding margin debt has surged to record levels, prompting advisers to recommend caution, especially to investors using high leverage.

Nguyễn Thị Thanh Hà, CFO of SSI Securities, said that recent growth in margin debt was concentrated in a few large firms known for strong financial stability and effective risk management.

Investors are increasingly adept at managing leverage, aided by technology and AI to develop risk strategies that mitigate margin calls during market fluctuations. — BIZHUB/VNS