‘Investors will be scared if savings interest rates exceed 10%’

In a recent report, SGI Capital – the open-end fund management company The Ballad Fund – said that the domestic financial market is witnessing interest rates continue to rise, with government bond interest rates gradually increasing to the peak area in 2022 and the race to increase deposit interest rates among banks is still taking place quietly. Interest rates of 9% have become more popular for 6-12 month mobilization periods and 10% for 3-5 year bank bonds, showing that the demand for long-term capital has increased sharply and banks have also determined that the trend of high interest rates will continue.

Accordingly, the stock and real estate markets are entering an adjustment period, creating many short-term difficulties. As for stocks, SGI Capital believes that the market is showing this big trend when prices and liquidity decline, with the focus being on interest rate-sensitive and real estate-related stock groups.

As noted by the analysis team, many investors participating in the market recently still keep their portfolios at a high proportion and buy at average prices, with the view that valuations are cheap and hope that the market will soon create a bottom to recover following economic growth momentum, and interest rates have peaked. However, in a major adjustment cycle like today, the analysis team believes that interest rates only really peak after rising sharply, causing credit demand to decline sharply, as shown by the action of lowering debt rates on a large scale in both the stock and real estate markets.

“Investor psychology is gradually shifting from concern to denial and will turn to fear if deposit interest rates continue to increase beyond 10% a year in the near future,” SGI Capital predicts.

In fact, from the beginning of the year until now, deposit interest rates have continuously increased. During the conference at the end of July, the leader of the State Bank once said that the economy’s capital needs are very large while the ability to mobilize is still limited, making the management of interest rates in recent times “relatively difficult”.

According to FIDT statistics as of the end of last week, 12-month term deposit interest rates are currently around 6.6-7% per year. At some banks or incentive programs for customers with large balances, the actual receipt rate can reach 8.5-9.4%.

Rising deposit interest rates often put pressure on the stock market through both cash flows and asset valuations. As savings become more attractive, some capital may shift from stocks to deposits and fixed income assets, reducing demand for stocks. At the same time, rising capital costs can put pressure on the profits of businesses that use a lot of leverage. From a valuation perspective, higher interest rates also increase the return that investors require, thereby narrowing the valuations willing to pay for stocks, especially for growth groups or with cash flows far into the future.

In fact, in July, VN-Index decreased more than 124 points, equivalent to 6.68%. SSI Research believes that the pressure to adjust comes from legal concerns at some listed companies, high interest rates and more cautious psychology in the international market. The market has not shown signs of changing trends in the medium term, as interest rate pressure is likely to last in the second half of 2026 in the face of high credit demand and ambitious growth targets.

In a recent report, TVS Research said that the deposit interest rate increased to 8% with a 12-month term is more attractive than the stock market, when the E/P (profit ratio on stock price) of VN-Index continued to decrease, as of the end of July only reaching about 7.7%. In addition, market developments have continued to rely heavily on the Vingroup group in recent months, causing stocks to lack diversity in investment goods, which is also a reason why investors have lost interest in this channel.

Combined with technical analysis, in the base scenario, TVS Research believes that the VN-Index can adjust again and move towards the 1,650-1,700 point area. According to the analysis team, investors with a high stock proportion should consider reducing it to a safe level. For groups holding money, you can monitor the developments of VN-Index in the target area mentioned above. Investors should only disburse funds in case the market bottoms and goes up to ensure safety.