Market Movement – APRIL 2026: COMMITMENT ON THE GROWTH AGENDA AMID EXTERNAL HEADWINDS

The two-week ceasefire between the US-Israel and Iran offers a temporary reprieve rather than a durable resolution, given the structural gap in bilateral demands. Over 45 days of hostilities have severely damaged Middle Eastern oil infrastructure, likely anchoring crude prices at US$90−100/bbl. A reversion to early−year levels (US$60/bbl) remains improbable even with de-escalation. These energy pressures are transmitting to US inflation, driving March headline CPI to 3.3% YoY from 2.4% and pushing expectations for the first Fed rate cut to 4Q26.

Under Kevin Warsh’s incoming leadership (May 2026), the Federal Reserve can provide monetary accommodation without direct federal funds rate cuts. Adopting a “Greenspan 2.0” framework, the Fed will likely view AI-driven productivity as a secular disinflationary impulse. Deregulation will serve as the primary policy lever. Expected measures—amending the Supplementary Leverage Ratio (SLR) for GSIBs, recalibrating Basel III, and supporting liquidity via Reserve Management Purchases (RMP)—aim to moderate short-term rates and ease credit conditions without full quantitative easing.

Vietnam’s 1Q26 GDP expanded 7.83% YoY—the highest first-quarter print since 2022, yet below government targets. Achieving the FY2026 ≥10% growth mandate requires activating three macroeconomic engines: accelerating public investment (VND8,200tn allocated for 2026-2030), sustaining high-quality FDI (1Q26 registered capital hit US$15.2bn, +42.9% YoY, driven by the 2025 Investment Law), and stimulating domestic consumption. However, near-term headwinds merit attention. March CPI reached 4.65% YoY, breaching the 4.5% target ceiling. Alongside a moderated manufacturing PMI of 51.2 and business confidence hitting a six-month low, cost-push inflation is driving corporate margin compression.

First-half domestic interest rate reductions appear unlikely, as credit growth (2.35% YTD) continues to outpace deposit mobilization (0.78% YTD). Instead of direct rate cuts, the State Bank of Vietnam is expected to rely on regulatory easing to manage system liquidity. Anticipated interventions include amending Decision 09/2024/QD-TTg to raise credit ceilings for Hanoi infrastructure projects, revising Circular 22’s Loan-to-Deposit Ratio (LDR) calculations, and finalizing a revised corporate bond market legal framework in April.

The VN-Index closed at 1,750 on April 10 (-1.93% YTD), recovering on temporary geopolitical stabilization and the FTSE Russell upgrade. Both the VN-Index and VN30 trade near five-year historical P/E averages, though rising Vietnam Government Bond yields pose a risk for further multiple contraction. Capital deployment should focus on selective accumulation in sectors with identifiable structural drivers. We favor Banks with a preference for state-owned institutions due to their cyclical positioning, Securities brokerages as primary beneficiaries of the market upgrade, and Steel & Materials companies aligned with accelerating public investment disbursements.