Interest rates rise, but not a tightening cycle

Following the holiday, deposit rates at many commercial banks edged higher. As of Monday, some lenders were offering rates of 5.3% to 7.2% a year, though yields above 7% were largely limited to smaller banks and applied to longer tenors.

Meanwhile, interbank rates at one point surged to 7-16% a year on very short-term tenors ahead of the holiday, as year-end funding demand intensified. The spike quickly eased after the State Bank of Vietnam (SBV) injected liquidity and conducted foreign-exchange swap operations.

Fluctuations in short-term interbank rates are not unusual, said Nguyen Anh Khoa, head of research at Agribank Securities Joint Stock Company (Agriseco), explaining that similar episodes occurred in the past when banks needed to rebalance liquidity quickly on the interbank market.

More importantly, the SBV – the central bank - has not signaled any shift toward monetary tightening. Policy rates have not been raised aggressively, and the regulator continues to maintain a stance supportive of credit growth.

Compared with late 2022 when exchange-rate pressures and the crisis at Saigon Commercial Bank (SCB) constrained policy flexibility, the current backdrop is considerably more stable.

In other words, the recent moves reflect technical liquidity management rather than the start of a new rate-hiking cycle.

Valuations remain attractive relative to bank deposits

A key factor underpinning the market’s resilience is relative valuation. The VN-Index, which represents the Ho Chi Minh Stock Exchange, is currently trading at a price-to-earnings (P/E) ratio of above 15 times, implying an earnings yield of about 6.65%. Compared with prevailing deposit rates of 6% to 7%, the implied return on equities remains broadly competitive.

Notably, rates above 7% are largely confined to smaller banks and longer tenors, while equity market flows tend to be more flexible in risk appetite and focused on capital appreciation rather than fixed income alone.

Trading patterns suggest withdrawal pressure has been minimal. After bouts of rate-driven concerns, the VN-Index typically rebounded quickly. On Monday, the benchmark rose more than 36 points to 1,860.14, marking a fourth consecutive gain and its highest close in a month.

This reflects that capital continues to favor risk assets as expectations for corporate earnings growth improve.

Multiple drivers advance stock market

Analysts stress that deposit rates are only one of several factors shaping the market. Vietnam’s equities continue to draw support from a range of positive underlying catalysts.

Huynh Minh Tuan, founder of FIDT Investment Consulting and Asset Management JSC and chairman of APG Securities, outlined supportive factors for the stock market in 2026.

He said valuations still offer room for upside, with forward P/E ratios seen at around 12-14 times, below the long-term average. Corporate earnings are entering a new growth cycle, suggesting the market has yet to fully price in the expansion ahead.

In addition, international capital is in the early stages of returning, driven by expectations of a market upgrade and further reforms, including new products. Infrastructure policy is also laying the groundwork for tangible growth, with public investment accelerating in transport and energy. The spillover effects are expected to benefit banks, and construction and power companies.

“The new cycle belongs to fundamentally strong asset groups. Banks are entering a re-rating phase, while infrastructure and energy will form the long-term growth axis. Overall, I believe the stock market is at the beginning of a new cycle, with valuations still at reasonable levels,” Tuan said.

The positive earnings picture in Q1/ 2026 is also expected to reinforce the stock market’s outlook.

Khoa said the quarter marks a reset following the year-end high season, meaning sectors with strong seasonality or those reliant on revenue recognition progress -such as construction and installation firms - will likely see clear divergence.

However, with 2025 earnings on an improving trend and interest rates staying at reasonable levels, many companies could continue to post solid results from the start of the year, particularly those with stable order backlogs, strong pricing power and healthy balance sheets.

However, as deposit rates trend higher, stock groups across the market are likely to diverge. The most visible shift is a weakening in short-term speculative activity, while capital is increasingly being deployed with a medium- to long-term horizon.

This makes it hard for the market to generate broad-based sharp rallies, but it fosters differentiation based on corporate quality, consistent with an accumulation phase as investors await new growth drivers.