Vietnam's stock market is experiencing a sharp decline in liquidity, placing renewed pressure on share prices. The key question now is where the billions of dollars that once flowed into the market each trading session have gone.

Liquidity plunges in the stock market

Vietnam's stock market entered June on a subdued note. During the June 1 trading session, trading value on the Ho Chi Minh Stock Exchange (HoSE) remained below VND6 trillion ($231 million) throughout the morning.

By the close, total market turnover had not reached VND10.2 trillion ($392 million), significantly lower than earlier this year when daily liquidity frequently exceeded $1 billion per session and far below the market's most active period, when between $2 billion and $3 billion changed hands every day.

Between May 25 and May 29, the VN-Index recorded its second consecutive weekly decline as liquidity fell to one of its lowest levels since the beginning of the year.

The rapid contraction in trading activity has placed considerable pressure on stock prices. On the morning of June 1, the VN-Index reversed from gains to losses of more than 10 points, moving further away from the 1,900-point threshold. A number of large-cap stocks, including VIC, VHM, VPL, VRE and major oil and gas shares, all declined.

The fortune of billionaire Pham Nhat Vuong fell about 1.9% to $32.6 billion, placing him 70th among the world's richest individuals.

According to market analysts, several factors have made investors increasingly cautious. After a strong rally led by a handful of blue-chip stocks, the VN-Index repeatedly approached its historical peak but failed to break through. As a result, investors became reluctant to chase higher prices and shifted into a wait-and-see mode.

The Vin Group-related stocks that had driven the market's advance are now showing signs of losing momentum.

At the same time, foreign investors have continued their aggressive net-selling trend. In May alone, overseas investors recorded net sales of nearly VND19.4 trillion ($746 million). Since the beginning of the year, cumulative net selling has reached approximately VND60 trillion ($2.31 billion).

This trend reflects not only profit-taking in Vietnam after substantial gains in many large-cap stocks, but also a broader global reallocation of capital. As stock markets in the United States, Japan and South Korea continue setting new highs, many international investment funds are restructuring portfolios to favor markets linked to technology and artificial intelligence-driven growth.

In addition, global factors such as US interest-rate policy, geopolitical tensions and uncertainty surrounding the world economic outlook have encouraged investors to remain defensive. Capital is therefore no longer flowing broadly across the market and is instead concentrated in selected sectors with unique growth stories.

Rising interest rates, record margin debt and Vietnam's funding challenge

PhamNhatvuong 2025Apr24 DHCD VIC.jpg
Vin Group-related stocks have been a major driver of Vietnam's stock market rally but are now showing signs of slowing down. Photo: VIC


Part of the capital is believed to be moving into bank deposits. Since the beginning of the year, many commercial banks have repeatedly raised deposit rates to address mounting funding pressures. At certain points, actual deposit rates offered by some banks reached 8-9% annually.

On June 1, BIDV sharply increased rates for deposits with maturities ranging from six to 36 months to between 6.6% and 6.8% per year. Many joint-stock commercial banks are currently offering rates of 7% annually, while some large deposits can earn between 7.4% and 10% per year.

As savings rates rise while the stock market becomes increasingly volatile, some investors have opted to return to bank deposits in search of more stable and less risky returns.

Behind this development lies growing liquidity pressure within the banking system. During the first five months of 2026, credit growth continued to outpace deposit growth by a wide margin. By the end of April, total outstanding loans across the banking sector had reached nearly VND19.5 quadrillion ($750 billion), up 18.26% year-on-year, while deposits remained roughly VND2 quadrillion ($77 billion) below total credit outstanding.

Vietnam's economy remains heavily dependent on bank lending, with the credit-to-GDP ratio reaching approximately 145%. Meanwhile, the capital market has not developed sufficiently to share the burden of financing economic growth.

According to the Ministry of Finance, total social investment demand during the 2026-2031 period is estimated at VND38.5 quadrillion ($1.48 trillion), including around VND5.1 quadrillion ($196 billion) in 2026 alone. Of that figure, projected credit demand is estimated at roughly VND1.8 quadrillion ($69 billion).

This means competition for capital between the banking system and the stock market is likely to remain intense for years to come.

Another factor influencing the stock market is the rapid expansion of margin lending. By the end of the first quarter of 2026, total margin debt across the market was estimated at approximately VND405 trillion ($15.6 billion), the highest level ever recorded. Margin loan interest rates remain commonly in the range of 13-14% annually.

Record-high margin debt reflects the substantially larger size of today's stock market compared with previous years. However, when financial leverage rises rapidly while liquidity declines, risks increase accordingly. If the market undergoes a sharp correction, forced selling could intensify price volatility.

Viewed broadly, capital has not disappeared from the economy. Instead, it is being reallocated. Some funds have moved into the banking system to support the economy's enormous financing needs, while other capital may be shifting toward bonds and real estate. At the same time, foreign investors are increasingly directing funds toward markets leading global growth.

Nevertheless, low liquidity does not always signal negative conditions. In many cases, it may indicate that selling pressure is weakening after a correction phase. If macroeconomic conditions remain stable, corporate earnings continue improving and interest rates do not rise excessively, capital could return to equities and provide the foundation for a new growth cycle.

According to analysts at Vietcombank Securities, the VN-Index is currently testing momentum around the 1,850-1,870 point range. ACB Securities also views the 1,850-point area as a key short-term support level. The current correction may gradually slow and evolve into a period of consolidation before a clearer trend emerges.

Manh Ha