Macro Report

Macro Report
Vietnam Macro Weekly_20240325

Overnight rate dropped to lower-bound range. Another VND 69.7 tn (-7.1% WoW) worth of 28-day SBV-bills has been issued last week, at an average rate of 1.35% p.a Mon-Thurs and then ticked up to 1.7% p.a on Friday. Outstanding bills reached VND 144.7 tn as of Friday (57% of the peak during Sep-Nov 2023). Liquidity in the system remains manageable, and the overnight interbank rate slid to 0.2% (-60 bps WoW) as of Friday, which is not the rate that the SBV aims for to limit FX outflows due to large USD-VND rate policy divergence. Weak credit demand is the key reason behind the slide in the interbank rate, but we might see there will be more volatility this week due to the end-of-quarter cyclical factor.

25/03/2024

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2024 Corporate Bond Market Outlook: Much More Needs to be Done

2024 marks the first year in the recovery phase for corporate bond market, in our view. On the supply side, we do think that companies with healthy balance sheets and sufficient cash flow might once again return to the corporate bond issuance market given the low-rate environment. Demand from institutional investors could rebound given the continuous need for yield seeking while retail investors might remain cautious to re-enter the market, given a stricter legal requirement and weak confidence.

With the help from the government, 2023 witnessed a calm end to a fairly tense year in the corporate bond market, and the soft-landing scenario in Vietnam appears to be underway. On the other hand, while the launch of the HNX secondary trading platform has provided some relief to jittery bondholders, we observed that market transparency has only slightly improved with limited public access to non-listed bond issuer financial information.

25/03/2024

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Vietnam Macro Weekly_20240318

Reverse repos have been activated to stabilize exchange rate market. The SBV has resumed bill issuance, marking the first move since Nov 2023. Total volume was moderate, at VND 15 tn per day of 28-day bills at an average rate of 1.4% p.a. In total, the SBV temporarily withdrew VND 75 tn ($3 bn). Liquidity in the system remains manageable, and the overnight interbank rate only ticked up to 1.5% p.a in the first 4 days of the week and then lowered to 0.8% (unch. WoW) as of Friday.

18/03/2024

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Vietnam Macro Weekly_20240311

Liquidity flow back to stability. There was no activity in the open market operations channel last week, while liquidity in the banking system has been well managed. Overnight interbank rates cooled down to 0.8% (-70 bps WoW) as of Friday, and average overnight interbank trading volume was also down to VND 270 tn from VND 330 tn the week before, reflecting lower demand for short-term liquidity.

11/03/2024

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Monthly Fixed Income Report – February 2024: Liquidity stress test during Feb

The SBV issued reverse repos in mid-Feb to address a sudden liquidity shortage.

Banks actively utilized the interbank channel for liquidity. Overnight interbank rates surged to 4%, but then cooled down to a more reasonable level.

Deposit rates continue to decrease at some banks, and the gap between SoCBs and JSCBs (of all sizes) has narrowed significantly.

The gap between the official and unofficial USD/VND widened.

The STV issued the breakdown of annual plan, favoring the 5Y tenure. 14-day repo transactions have been activated to support liquidity

Government bond yields increased slightly in the secondary market.

06/03/2024

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Vietnam Macro Weekly_20240304

Interbank interest rates back to more reasonable level. Liquidity in the banking system has been well managed after a week characterized by elevated pressure. There was no activity in open market operations, and a total of VND 6.03 tn ($243 mn) of 7-day reverse repos had expired, equivalent to a withdrawal of liquidity out of circulation. In terms of interbank interest rates, overnight interbank rates cooled down to 1.47% (-220 bps WoW) as of Friday. However, banks still aggressively participated in the interbank market to fulfill liquidity needs, and average overnight interbank trading volume remained elevated, at VND 337 tn (+5% WoW) for the week.

04/03/2024

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Vietnam Macro Weekly_20240226

Interbank rate surged on the back of liquidity shortage. Liquidity in the banking system has been under pressure since last week, and open market operations are back into play. There was a total of VND 6.03 tn ($243 mn) of 7-day reverse repos utilized for 2 working days, and only one participant joined the bid for each auction. Afterwards, the OMO market started to normalize back  its way to returning back to a state of relative placidity.

26/02/2024

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Vietnam Macro Weekly_20240219

Interbank rate quickly cooled down after Tet. Open market operations reverted to a cyclical state of inactivity, and there was a negligible amount of 7-day reverse repos that expired (VND 2.28 bn). The overnight interbank interest rate spiked in the last working day before Tet to 3.2%, but quickly cooled down to 1.1% right after. Similarly, trading volume in the interbank market declined slightly, but still remained elevated, at around VND 280 tn per day.

Please note: Due to the Lunar New Year public holiday from February 8 to 14, in this report we will cover the money market movement for a 2-week span, from Feb 5 to Feb 16.

19/02/2024

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Monthly Fixed Income Report – January 2024: Entering 2024 with a stable liquidity

The SBV slightly issued reverse repos on the last day of Jan to support liquidity.

Banks actively utilized the interbank channel for liquidity. Overnight interbank rates hovered in a low range, then picked up just prior to Tet.

Deposit rates continue to decrease for shorter terms and the gap between SoCBs and JSCBs (both big, medium and small) has narrowed significantly.

The gap between the official and unofficial USD/VND widened; and the SBV announced stabilization of domestic gold prices.

The STV issued annual and quarterly plans, favoring the 5Y tenure.

Government bond yields declined for short-term tenures in secondary market.

07/02/2024

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Vietnam Macro Weekly_20240205

Interbank rate surged due to higher liquidity demand towards Tet. Last week in open market operations, there was a small volume of 7-day reverse repos being utilized (VND 2.28 bn in total) at 4%. It was indeed a small volume for a pre-Tet season, reflecting that liquidity in the system has still been well managed and demands via OMO channel are weak. In fact, most commercial banks actively use the interbank channel for temporary liquidity funding.

05/02/2024

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Vietnam Macro Weekly_20240129

Closely monitoring the USD/VND. Last week, we saw an inactive week in the open market operations as neither reverse repo nor SBV treasury bill issuance was utilized. The overnight interbank interest rate stayed at around 0.12% (-3 bps WoW) and the VND-USD gap kept at approx. -500 bps. Trading volume improved slightly to VND 245.4 tn per day (+7% WoW). We might expect there will be more turbulence in the interbank market for the next two weeks, responding to higher cash demand towards the Tet holiday.

29/01/2024

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Vietnam Macro Weekly_20240122

Trading volume in the interbank market slid. Last week, neither reverse repo nor SBV treasury bill issuance was utilized. The SBV as it has regularly done has continued to offer VND 1 tn of 7-day reverse repos per day. The overnight interbank interest rate stayed at around 0.15% (unch) and the VND-USD gap kept at approx. -500 bps. Trading volume cooled down to VND 231 tn per day (-12.8% WoW), reflecting that liquidity in the system has been well-managed.

22/01/2024

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Vietnam Macro Weekly_20240115

Overnight interbank interest rate stayed at low range. Last week, open market operations were muted. There was a relatively non-material amount of 7-day reverse repos that had expired (VND 1.04 bn), while no SBV-bills or reverse repo contracts were utilized during the week. The overnight interbank interest rate remained at around 0.15% (unch WoW) as of Friday. Trading volume in the interbank market remains elevated, at around VND 265 tn per day.

15/01/2024

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Monthly Fixed Income Report – December 2023: Ending the year on an upbeat note

The SBV slightly issued reverse repos on the last day of the year to support liquidity.

Overnight interbank rate hovered around the low range, then picked up last week of Dec.

Deposit rates continue to decrease for shorter terms.

Credit growth ticked up in Dec, but more likely due to cyclical factor; Gap between deposit balance and credit outstanding bridged.

The gap between official and unofficial USD/VND widened; SBV announced stabilization of domestic gold price.

Government bond yields retraced in both primary and secondary market.

Trading volume in secondary market jumped significantly in Dec.

10/01/2024

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Vietnam Macro Weekly_20240108

Overnight interbank interest rate cooled down. Last week, open market operations returned to a cyclical state of inactivity. There was a modest amount of 7-day reverse repos utilized (VND 1.04 bn), while the VND 4.5 tn has been expired. The overnight interbank interest rate quickly cooled down to 0.2% (-340 bps WoW) as of Friday. Trading volume in the interbank market remains elevated, at around VND 280 tn per day. We believe that there might be more volatility in this channel, particularly as liquidity comes under pressure as the Tet holiday approaches.

08/01/2024

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