Macro/ Strategy

Await the pivot monetary policy.

After 8 months from the last rate hike to 5.25%-5.5% - a highest level in the last 22 years to combat inflation and marking 2 years of tightening monetary policy, market starts to expect the pivot monetary policy to easing in 09/2024.

The July meeting minute also showed that a vast majority of FED members agreed that FED can deliver a first rate cut in Sep-2024. Thus it is expected the pivot monetary policy to easing could happen very soon.

A convergence monetary policy with FED will reduce many pressure on the State Bank of Vietnam.

As the rate is expected to cut down by 1.5 percentage point, we expect the State Bank of Viet Nam (SBV) will have more room to cut key interest rate in 2025 by 50 basis point.

Beside key interest rate cut, we expect the liquidity in the financial market will be more ample. As the VN-USD interest rate gap is narrowed, SBV will be able to maintain an ample liquidity condition to support the economy.

Stock market is greatly benefit from the pivot monetary policy.

Thanks to the FED rate cut in the next two and a half year, we foreseen the prospect of Vietnamese stock market have becoming more attractive in 2024 and 2025. The stock market growth will be mainly driven by (1) convergence monetary policy release pressure on exchange rate, (2) a comeback of foreign fund flow, (3) market revaluation and (4) earnings growth maintain the recovery momentum.