Vietnam Insight

Key highlights:

The Fed raised interest rates by 25bps on September 16, marking its first rate hike since 2023. Accordingly, the FOMC unanimously agreed to raise the policy rate by 0.25 percentage points to 3.75-4%.

The BOE decided to keep interest rates unchanged on September 17, despite inflation in the UK continuing to run significantly above its target.

The FTSE upgrade of Vietnam’s stock market, effective September 21, is estimated to trigger approximately $200 million in foreign investment flows during the week, with the first major deployment expected in the September 18, 2026 session.

Assessment: Following the Fed’s rate hike as widely expected, the market rebounded after having largely priced in the decision beforehand. In the coming sessions, the VN-Index is likely to refocus on foreign capital flows related to the market upgrade, particularly during the first round of fund reallocation. We believe the rate hike is unlikely to fully address inflationary pressures, as the primary driver remains constrained oil supply amid the prolonged conflict. Domestically, Friday’s session saw strong foreign trading activity, with total buying and selling approaching VND 20,000 billion; however, net buying amounted to only approximately VND 1,200 billion. Net buying was sustained throughout the session, but the ATC session saw unexpectedly strong selling pressure in several large-cap stocks at prices below their previous levels, with trading volume accounting for approximately 40-50% of the full-session volume. We believe selling pressure from frontier market funds will eventually subside, and expect the market to gain in the coming week.

Technical View: The VN-Index ended the week at 1,815.6 points (+20.45 points, +1.14%), with a slight improvement in weekly trading liquidity. The market gained throughout the week but unexpectedly declined sharply during Friday’s ATC session, which was surprising given investors’ expectations that foreign upgrade-related capital would enter the market strongly. Nevertheless, the index currently has a relatively solid price base around the MA 50 at above 1,800 points.

Investment Idea: Investors may consider accumulating large cap stocks at lower levels that are likely to attract upgrade-related capital flows, particularly those with attractive valuations and strong fundamentals. However, investors should remain cautious and avoid chasing prices, as the prevailing trend remains range bound.