Vietnam's Macro Policy Wave and the VN-Index Opportunity: When Monetary Easing Meets a Historic "Phase C"

Vietnam's stock market stands at a crossroads. Government policy aimed at driving credit growth is running up against the reality of stubbornly high deposit rates. It is precisely this intersection of monetary easing and a rising debt cycle that is opening one of the market's rarest investment windows, with a broad swath of stocks now trading at valuations typically seen only in a crisis

Macro Policy Landscape: From Expectations to Disappointment and New Signals

The April-June 2026 period marked a major turning point in the Government’s and the State Bank of Vietnam’s policy stance, with a series of easing measures introduced to accelerate credit growth and channel more lending into the economy:

• Requiring commercial banks to reduce lending rates

• Expanding credit limits for social housing, industrial park, and strategic infrastructure projects undertaken by major groups such as Vingroup, Sun Group, and Masterise

• Raising the cap on the use of short-term funding for medium- and long-term lending to 40%

• Introducing policies to support lending for public investment and strategic infrastructure

These measures generated significant expectations among investors. The prevailing view was that policies aimed at expanding lending would inevitably be followed by measures to support deposit mobilization and funding, because a sustained increase in lending requires the banking system to have a sufficiently large and stable source of funds on the liability side.

However, by the end of June 2026, the market was confronted with a concerning period of silence, as no follow-up measures to support deposit mobilization had been introduced. Investor expectations therefore quickly turned into disappointment, while the stock market correction was further amplified by margin calls across institutions and persistent net selling by foreign investors, reaching a scale equivalent to roughly 60–70% of the sell-off seen during the 2022 downturn.

Entering August 2026, positive signals unexpectedly began to re-emerge as two of the system’s three key “liquidity valves” started to open:

a. OMO (Open Market Operations)

For the first time in an extended period, the State Bank of Vietnam conducted four consecutive net liquidity injections through OMO, rather than allowing maturing funds to roll off as before. While still an early signal, this suggests that the central bank is beginning to inject liquidity back into the banking system.

b. State Treasury – Improving Both Quality and Quantity

This is arguably the most notable development in the latest policy adjustment:

• In terms of quality: the proportion of State Treasury deposits at commercial banks that can be recognized as mobilized funding has been increased from 20% to 50%.

• In terms of quantity: the Ministry of Finance has proposed raising this ratio further, potentially to 60–70% or even 100%, in line with the precedent that existed before 2019.

The policy is expected to take effect from January 2027 and may require around six months to fully transmit through the economy. Nevertheless, the broader direction points increasingly toward a more accommodative policy stance.

c. Foreign Exchange Swap

This instrument has yet to send a clear signal, but it remains an additional policy buffer that can be deployed to provide further support to the economy when necessary. It may not need to be activated if OMO operations and the State Treasury mechanism prove sufficient to deliver the desired liquidity impact.

“Phase C” of the Stock Market and Strategic Positioning: A Once-in-Every-Few-Years Opportunity

Under the Wyckoff framework, the market is currently entering “Phase C,” the final shakeout stage, a phase that has appeared only three to four times over the past 20 years of Vietnam’s stock market history. This is a period characterized by:

• A broad number of stocks breaking below their previous support and bottoming levels

• Widespread panic selling among retail investors, with market sentiment deteriorating into a state of near-total capitulation

• Both technical and fundamental analysis becoming increasingly out of sync with actual price movements

• A number of investment funds reporting losses significantly above initial expectations

This is precisely the critical accumulation zone that typically precedes the return of large-scale capital to the market.

Source: TradingView

The fundamental nature of the stock market is to mobilize capital: the higher a company’s share price, the more capital it can raise. Therefore, once policy constraints are eased, credit is injected into the economy, and debt in the economy begins to increase again, the stock market will inevitably enter an explosive growth phase.

The flow of capital through the economy generally operates in cycles: bank credit is injected into the system, and when liquidity runs low, the system has to attract money back by raising deposit rates. Once sufficient funds have been mobilized, credit is then injected again. At present, the market has reached the final stage of the liquidity-withdrawal process, with deposit rates at many banks having risen to 8–9.5% per year, on par with the peak levels of 2022.

The key difference in the new cycle: as the real estate sector remains subject to tighter policies, the collateral used to obtain credit will no longer necessarily be real estate, as it was in previous cycles, but will instead shift toward equities. From now until next year, Vietnam’s stock market is therefore highly likely to become a point of explosive growth, while also serving as a major collateral asset for attracting credit and investment capital.

The Foreign Capital Paradox: Buying the “Economy” but Selling the “Stock Market” 

A major paradox is emerging: FDI and foreign currency are flowing into Vietnam at record levels, yet foreign investors continue to be net sellers in the stock market. 

This is likely only a temporary divergence. Capital always tends to flow toward where valuations are most depressed, and with Vietnam’s stock market currently trading at valuation levels that are “only seen during crises,” large capital inflows are expected to return soon.

The history of previous cycles has shown that at valuation bottoms, foreign investors often enter periods of very strong net buying. On this basis, over the next six months, foreign capital is expected to return to buying Vietnamese equities, opening up a profit opportunity of at least 30% from current price levels.

Medium- and Long-Term Investment Thinking Based on Macro Fundamentals and Selection of Sectors That Benefit Most from Growth

The key point is the difference between a broad strategic perspective and short-term behavior.

In “Phase C” of the Wyckoff model, individual investors should not analyze or be psychologically affected by each daily rise and fall, given the large price swings, nor should they rely on T+ speculative trading strategies during this period. Instead, we need to focus on analyzing the broader economic landscape and maintaining a macro perspective. Investors should focus on the major directions of capital flows and select sectors that stand to benefit the most from the Government’s policies aimed at promoting economic growth.

Banking and securities are forecast to be the first sectors to benefit, as they serve as the transmission channels through which liquidity is injected to stimulate the economy. In addition, leading blue-chip stocks are also expected to be selected by large capital flows, such as VNM, MWG, HPG, GMD, FPT, etc., given their relatively attractive valuations and superior growth potential within their respective industries.

Conclusion: The Convergence of Macro and Market Factors

Looking at the overall picture, the current environment shows a rare convergence of multiple factors:

1. Macro policy is shifting from control toward stimulation, with OMO, State Treasury, and credit measures being activated one after another to support growth.

2. The debt cycle is in the final stage of the liquidity-withdrawal process, preparing to enter a new debt-expansion phase.

3. Market sentiment is currently at a level of “discouragement” and “psychological collapse” - a sign of a cyclical bottom.

4. The valuations of many stocks are at “economic crisis” levels while earnings are still growing well, a combination that is very rarely seen.

5. Large-scale foreign capital will soon return to the stock market.

This is a period in which investors need to adopt a broad strategic perspective, rather than focusing excessively on short-term fluctuations in individual stocks, and instead concentrate on stocks that have the potential to lead the market in the upcoming debt-expansion cycle. The signals that need to be closely monitored are OMO, State Treasury, Swap, and interest-rate movements. Once these “liquidity valves” are activated in a synchronized manner, Vietnam’s stock market is highly likely to soon enter a new upward wave.