Macro Report

Vietnam Q3 GDP growth beat all estimates (our estimate range is 6.85-6.9% YoY) to hit 7.3% YoY. As Q1 and Q2 GDP growth were all revised up slightly by 2 or 3 bps, real annual GDP growth up to 9M19 was 6.98% YoY (our estimate: 6.8% YoY). All in all, it’s been a nice surprise to see Vietnam to perform at the top band of expected economic growth despite an environment of global slowdown.

Last week, liquidity in the banking sector remained ample. Given an abundance in liquidity, interbank rates continued to trend further downwards, closing the week at 2.37% p.a. for the O/N tenure (at -41 bps WoW), and at 2.63% p.a. for the one-week tenure (at -37 bps WoW).

Last week, interbank rates cooled down after the national holiday, closing the week at 3.65% p.a. for the O/N tenure (at -70 bps WoW), and at 3.78% p.a. for the one-week tenures (at -57 bps WoW). The central bank net withdrew liquidity from the financial system, with a total of VND 12.14 tn. In detail, VND 988 bn was lent out via reverse repo transactions, while VND 13.13 tn went expired. At the same time, no bills went expired or were issued. 

Last week, demand for cash sharply increased before the National Day vacation. As a result, interbank rates soared up strongly, closing the week at 4.35% p.a. for both O/N (+123 bps WoW) and the one-week rate (+112 bps WoW). The central bank this week continued to net pump liquidity into the financial system, with a total of VND 31.13 tn. In detail, VND 13.13 bn was lent out via reverse repo transactions, while none went expired. At the same time, VND 18 bn of 7-day bills had expired, while no bills were issued.

The interbank rate edged up marginally last week, closing the week at 3.12% pa for the overnight rate and 3.23% for the one-week tenure. The central bank this week net pumped total liquidity of 24 tn VND into the financial system. In detail, VND 18 bn worth of 7-day bills was issued at 2.75% p.a., while VND 42 bn of bills expired. At the same time, only VND 20 bn expired via reverse repo transactions.

The interbank rate cooled down last week, closing the week at 3.00% pa for the O/N rate and 3.1% for the one-week tenure. The central bank this week returned to net withdraw VND 3 tn out of the banking system. In detail, VND 42 bn of 7-day bills was issued at 2.75% p.a., while VND 39 bn of bills had expired. At the same time, only VND 20 bn was lent out at 4.75% p.a. via reverse repo transactions.

The interbank rate slightly inclined again last week, at about 8-10 bps to 3.08% pa for the O/N rate and 3.2% for the one week tenure. The central bank has continued its path of injecting liquidity into the financial system, to the tune of around VND 11 tn. The VND has been under heavy pressure after CNY broke the psychological level of 7.00 against the USD during the week, so a higher interbank rate in response to this is not a surprise. Indeed, the slight incline to the interbank rate shows a sense that domestically the situation has been relatively well anchored.

Last week, interbank interest rates inched up slightly, closing out the week at 2.98% p.a for the overnight tenure at +10 bps WoW, and with 3.12% p.a. for the one-week tenure, at +12 bps WoW. The central bank net pumped liquidity into the market, with a net amount of VND 2 tn via open market operations. VND 50 tn of 7-day bills were issued at 2.75% p.a., while VND 52 tn of 7-day bills went expired. At the same time, none was lent out nor came due via reverse repo transactions.

Last week, liquidity in the sector continued to improve. By the weekend, interbank interest rates continued to fall -20 bps WoW to 2.88% p.a for the overnight tenure, and to 3.00% p.a. for the one-week tenure, a -18 bps WoW drop. The central bank turned to withdraw liquidity out of the market, with a net amount of VND 22 tn via open market operations. VND 52 tn of 7-day bills were issued at 2.75% p.a., while VND 49 tn of 7-day bills went expired. At the same time, none was lent out nor came due via reverse repo transactions.

Last week, liquidity in the sector continued to improve. By the weekend, interbank interest rates had dropped to 3.08% p.a for the overnight tenure at -7 bps WoW, with 3.18% p.a. for the one-week tenure at -9 bps WoW. The central bank pivoted to infuse liquidity into the market with a net VND 19 tn via open market operations. VND 20 tn of 7-day bills were issued at 3% p.a. and VND 10 tn of 7-day bills were issued at 2.75% p.a., while VND 49 tn of 7-day bills went expired. At the same time, none was lent out nor came due via reverse repo transactions.

Last week, liquidity in the sector continued to improve. By the weekend, interbank interest rates dropped -14 bps WoW to 3.16% p.a. for the overnight tenure, and a -17 bps decrease to 3.27% p.a. for the one-week tenure. The central bank continued to net withdraw liquidity from the market by VND 14 tn via open market operations. VND 49 tn of 7-day bills were issued at 3% p.a., while VND 35 tn worth of 7-day bills expired. At the same time, net reverse repo transactions was at parity.

Last week, liquidity in the sector improved significantly. Interbank interest rates were subdued again throughout the week, closing out by the weekend at 3.30% p.a for the overnight tenure at -71 bps WoW, with 3.44% p.a. for the one-week tenure at -60 bps WoW. The central bank net withdrew liquidity from the market with VND 14 tn, via open market operations. VND 35 tn of 7-day bills were issued, while VND 33 tn of 7-day bills went expired. At the same time, none was lent out via reverse repo transactions, while VND 12 bn went expired.

Indeed, 1H 2019 economic growth was in line with the national targets set, along with a tamed degree of inflation, with a stable currency and increasing credit growth to boot. On the other hand, concerns might hinge upon globally weak trade data influencing domestic data. Additionally, weaker construction activities in HCMC and slow public investment disbursement is something to monitor.