Vietnam Insight

Key highlights:

• At the close of trading on 18 December, the overnight (ON) interbank rate fell sharply from 7.5% p.a. to 4.6% p.a., a decline of 2.9 percentage points.
• Today (19 December), nationwide ceremonies are being held to break ground, inaugurate and open to technical traffic 234 projects with a total investment value of VND3.4 quadrillion.
• According to data released by the US Department of Labor on 18 December, November CPI rose 2.7% y/y, lower than the most recent reading recorded in September.

Assessment: Over the past week, the market has shown signs of easing as secondary-market liquidity improved, supported by liquidity injections (USD swaps) and the Fed’s rate cut. FX pressure has also moderated, with the VND up only 3.3% YTD, which has in turn supported interest-rate-sensitive sectors such as real estate. News related to public investment has also helped drive solid gains in this group over the past week.

Technical view: The VN-Index closed the week at 1,704 points (+57.4 points; +3.49% w/w) on low liquidity. Market gains were broad-based across sectors, with notable strength in oil & gas, financials and real estate. The index has continued to trade within the 1,600–1,700 range since August and faces strong selling pressure near 1,800. Foreign investors remain slight net sellers. On the daily chart, the primary trend remains range-bound, as moving averages are converging and RSI hovers around a neutral level of ~50.

Investment idea: Short-term investors may consider accumulating around the 1,600–1,620 zone upon signs of a rebound and taking profits near 1,750. Medium- to long-term investors may continue to hold positions. Focus can be placed on public investment beneficiaries, banks and oil & gas, where capital flows are currently concentrated.