Vietnam’s stock market, valued at over USD 200 billion, suffered a sharp downturn on December 12, marking the steepest decline across Asian markets. The VN-Index dropped 52.01 points (-3.06%) to close at 1,646.89, while the VN30 Index lost 57.26 points (-2.98%) to end at 1,867.03.

The widespread sell-off affected nearly all sectors, with only one of the 30 blue-chip VN30 stocks  -  BCM  -  closing in the green. The rest suffered significant losses, especially shares linked to the Vingroup conglomerate.

Vinhomes (VHM) and Vincom Retail (VRE) both hit their floor prices, plunging nearly 7%. Vingroup (VIC) fell for the third consecutive session, shedding VND 2,000 to close at VND 144,000 per share. This follows a 7% floor-drop on December 10 and a 1.9% fall on December 11.

Vinpearl (VPL) also plummeted to its floor price, losing VND 6,300 to close at VND 84,700.

The sustained decline of the "Vin family" of stocks over three sessions has dealt a psychological blow to investors, contributing to broader market pessimism.

Across the board, more than 600 stocks declined while fewer than 200 gained. Many lost 3–4%, with several in the real estate and securities sectors dropping to their daily limit.

The broad-based slump followed two sluggish sessions and was exacerbated by unusual financial market behavior rarely seen at year-end.

According to Luu Chi Khang, Director of Research at Kien Thiet Securities (CSI), the market was rattled by mounting concerns over banking system liquidity. Overnight interbank lending rates surged to 7%  -  the highest since October 2022.

In response, the State Bank of Vietnam (SBV) injected liquidity into the system. However, it also raised the open market operation (OMO) lending rate from 4% to 4.5%. Commercial banks began increasing deposit rates last week by 0.3–0.7%.

This triggered fears of a full-scale race to raise deposit rates, which could drive up lending costs. Higher capital costs may dampen both consumer spending and business investment, ultimately affecting corporate profits and market sentiment.

Interbank interest rates rose sharply even as credit growth outpaced deposit growth  -  a typical year-end phenomenon that has left many banks scrambling for liquidity.

Tran Thi Khanh Hien, Head of Research at MB Securities, echoed similar concerns, noting that the stock market is under pressure from rising interest rate trends.

Despite several consecutive sessions of decline, trading volume has remained modest, suggesting that investors are still hesitant to bottom-fish. On December 12, although the sell-off was severe, the total trading value on HoSE was just around VND 22 trillion (USD ~900 million).

Adding to the pressure, foreign investors continued to offload shares, with a net sell of VND 600 billion.

With deposit rates at some banks reaching 7.5–7.8% annually for six-month terms, cash may increasingly flow back into the banking system. Year-end demand for cash  -  including debt repayment and business operations  -  may further drain liquidity from the stock market.

The IPO and share issuance wave is also absorbing capital from existing equities.

Despite the current slump, analysts remain cautiously optimistic about the medium- to long-term prospects for Vietnamese equities.

According to Luu Chi Khang, while deposit rate hikes are real, they remain moderate for now. If they rise significantly and persist, lending rates may follow suit. However, authorities are unlikely to allow borrowing costs to rise too sharply, given the government’s 2026 GDP growth target of double digits.

Monetary easing is expected to remain the overarching policy stance. The current rate hikes are likely seasonal, tied to year-end demand, and the SBV is expected to intervene to prevent any prolonged or excessive increases. A projected rate hike range for 2026 is 0.5–1.5%.

Globally, the US Federal Reserve has already cut rates three times this year, ended balance sheet tightening, and resumed bond purchases  -  easing pressure on the USD/VND exchange rate and supporting a more optimistic market outlook.

Earlier, Dragon Capital stated that Vietnam’s stock market retains strong fundamentals heading into 2025–2026. Corporate earnings continue to beat expectations, and valuations remain attractive, with forward P/E ratios estimated at 12.5–13x for 2025 and 11x for 2026  -  lower than many regional peers.

Additionally, an expected upgrade of Vietnam’s stock market from frontier to emerging status could attract a new wave of international capital inflows.

Manh Ha