Vietnam Insight

Highlights

Immediately after issuing Official Document No. 608 on 18 October, the State Bank of Vietnam convened a meeting with credit institutions this morning, 19 October, requiring a cut of at least 0.5 percentage point per annum in deposit rates on tenors of 6 months and above, together with a reduction of 1.5–2.0 percentage points per annum in lending rates for production, business and priority sectors, conditional on safeguarding the soundness of the banking system.

The draft amended Law on Property Auction was submitted to the National Assembly on the morning of 19 October. It proposes raising the minimum pre-bid deposit for auctions of land use rights allocating residential land to individuals from 10% to 20% of the starting price, while keeping the 50% ceiling unchanged.

VinFast (VFS) reported second-quarter revenue above VND 30,000 billion, with vehicle deliveries surging 96%.

Assessment: The market responded positively, led by real estate names on the State Bank’s rate-cut guidance. We view this as a short-term catalyst only; the current advance is not sufficient to confirm that the market has entered an uptrend. Caution remains evident despite the ongoing third-quarter earnings season.

Technical view: The index closed the week at 1,774.1 points (+68 points, +4%) on the weekly chart with a marked improvement in liquidity, driven mainly by VIC, VHM and VPL. Most sectors advanced and market breadth improved. The index is approaching its 50-day moving average and is expected to head toward the 1,800–1,840 zone; however, short-term profit-taking pressure is likely to emerge, particularly after three consecutive sessions of gains. Support and resistance stand at 1,660 and 1,800 respectively.

Trading strategy: Investors should treat the headline index as a reference only, given the market is heavily skewed by the Vingroup complex. Caution is warranted in the near term, but opportunities remain in sectors attracting inflows, including exporters, real estate, industrial property and retail. Risk-averse investors should favour low-beta names with high dividend payouts and low leverage.