Vietnam’s Economic Landscape Post-Lunar New Year: An Overview of Market Dynamics
By Ngoc Diem, Chau Anh
Date: Tue, February 24, 2026 | 9:56 am GMT+7
Market Resilience Amid Rising Deposit Rates
In the wake of the Lunar New Year holiday, which wrapped up on Sunday, Vietnam has seen a modest increase in deposit rates. This financial shift typically indicates challenges for equity markets. Yet, contrary to expectations, the VN-Index, Vietnam’s key stock market benchmark, has shown remarkable resilience, even climbing close to its peak for the month. This raises intriguing questions about market dynamics and investor sentiment.
Rising Deposit Rates Without a Tightening Cycle
Following the holidays, commercial banks reported slightly elevated deposit rates, with offerings ranging from 5.3% to 7.2% annually. Notably, rates exceeding 7% were often restricted to smaller institutions and longer-term deposits. Just before the holiday, short-term interbank rates spiked, reportedly reaching 7-16% due to heightened year-end funding demands. However, this surge quickly subsided after the State Bank of Vietnam (SBV) infused liquidity and engaged in foreign-exchange swap operations.
Nguyen Anh Khoa, head of research at Agribank Securities, emphasized that these fluctuations in interbank rates are not uncommon, with similar occurrences in the past. The current environment is markedly different from late 2022, where exchange-rate pressures and banking crises limited policy flexibility. The SBV has not indicated a shift towards tightening monetary policy, maintaining a favorable outlook for credit growth instead.
Attractive Valuations Compared to Bank Deposits
A key underlying factor propelling the VN-Index is its relatively attractive valuation. With a price-to-earnings (P/E) ratio exceeding 15, the implied earnings yield of approximately 6.65% renders equity investment competitive against prevailing deposit rates. These attractive valuations have made equities particularly appealing, especially in a market where interest rates above 7% remain confined to smaller banks and longer-term deposits.
Interestingly, trading patterns show that withdrawal pressures from equities have remained minimal, with the VN-Index rebounding swiftly after past concerns regarding interest rates. Recently, the index surged over 36 points to close at 1,860.14, marking its fourth consecutive gain.
Multi-Faceted Drivers of the Stock Market
Analysts stress that the rise in deposit rates represents just one of the myriad factors influencing the stock market. Support for Vietnam’s equities comes from several encouraging catalysts. Huynh Minh Tuan, founder of FIDT Investment Consulting, noted that valuations still have room for growth, with forward P/E ratios hovering around 12-14, below the long-term average. Corporate earnings appear to be entering a growth cycle, indicating that the market has yet to reflect this potential expansion comprehensively.
Moreover, the influx of international capital is in its early stages, bolstered by expectations of market upgrades and reforms. Infrastructure policies are also paving the way for growth, with public investments accelerating in sectors such as transport and energy – a boon for banks, construction, and power companies alike.
A New Growth Cycle for Fundamentally Strong Assets
Tuan anticipates a new cycle focusing on structurally sound assets, particularly in banking, infrastructure, and energy, which are expected to serve as long-term growth pillars. The first quarter of 2026 is anticipated to bring positive earnings, further solidifying the stock market’s optimistic outlook.
Nguyen Anh Khoa highlights that sectors experiencing strong seasonal performance—like construction—will likely show distinct variability. Despite pressures from rising deposit rates, many companies with robust order books and sound finances are set to deliver solid results from the start of the year.
However, as deposit rates push higher, a notable divergence is expected among stock groups. Short-term speculative activities may wane, with capital increasingly allocated toward medium- to long-term investment horizons. This shift could lead to pronounced differentiation based on corporate performance, aligning with an accumulation phase where investors remain poised for new growth drivers.
The evolving economic landscape post-Lunar New Year in Vietnam offers a unique interplay between rising deposit rates and resilient equity markets. Understanding these dynamics illuminates promising avenues for investment while outlining the challenges ahead.