Fed rate hike unlikely to disrupt Vietnam s stock market
The US Federal Reserve s latest 25 basis point rate hike is unlikely to cause significant short term disruption to Vietnam s stock market with investors instead watching the USD treasury yields and the central bank s next policy signals
The Federal Reserve raised its benchmark interest rate by 25 basis points at its meeting on September 17, marking the first increase since 2023. The decision, approved unanimously by the 12-member committee, was widely anticipated given recent surveys indicating a nearly 90% probability of a rate hike. Goldman Sachs now expects at least one more rate hike this year, with October being the most likely timing.
The move suggests policymakers expect inflation to return to the 2% target more swiftly. While the US Dollar Index (DXY) rose sharply following the announcement, the impact on Vietnam's stock market is expected to be limited. Historically, VN-Index, Vietnam's main stock market index, has tended to decline in the 20 days preceding Fed rate hikes.
However, declines were relatively modest, and there was no significant drop in the weeks following the hikes. Analysts recommend reducing equity exposure now and maintaining a low allocation to stocks, waiting for the market to reflect the new monetary policy stance and for valuations to improve before investing.
Written by urgent.news from Vietnam Investment Review's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
