Vietnam Insight

Highlights:

The United States and Israel continue to strike multiple targets in Iran, while Tehran and its affiliated groups have retaliated by attacking bases, ports, and infrastructure in territories of Washington’s allies.

Escalating tensions in the Middle East are pushing energy prices sharply higher. While inflationary pressure may rise again, Fed officials are likely to have less incentive to cut interest rates.

Vietnam banking rates (Mar 6): Deposit rates continue to increase, with six banks raising rates above 8%.

Fuel prices: Domestic gasoline and oil prices surged on the afternoon of March 5, with fuel prices jumping by more than VND 7,000 per liter.

Assessment: The market is facing negative impacts from the escalating conflict between the US–Israel alliance and Iran. Notably, oil prices have surged about 21% over the past week after the Strait of Hormuz—accounting for roughly 20% of global oil and LNG flows—was reportedly closed. This development is increasing pressure on inflation and global economic growth. Markets are now expecting the Fed to slow its pace of rate cuts. These factors are unfavorable for Vietnam, which is a net energy importer. Domestically, fuel prices have spiked, adding pressure on inflation, interest rates, and the exchange rate. At the same time, banks have raised deposit rates to meet funding demand for economic growth. Foreign investors also recorded a strong net selling week amid a global “flight to safety.”

Technical View: VN-Index closed the week at 1,767.84 points (-112 points; -5.98%) with elevated liquidity. The market has effectively erased its post-Tet rally and returned to the previous trading range below 1,800 points. If the index breaks below 1,750, there is a high probability it could fall deeper toward the 1,700 level.

Investment Ideas: Short-term investors should prioritize staying on the sidelines given the unpredictable risks from geopolitical tensions. For medium-term positions accumulated at low prices, investors may continue holding exposure to sectors such as steel and banking but with moderate stock allocation.