Macroeconomic Strategy Report – Analysis of the Business Cycle, Profit Cycle, and Vietnam Stock Market Cycle

During the bear market rebound at the end of last year, the market reflected a growing belief that interest rates were peaking. Historically, when the State Bank of Vietnam (SBV) is the cause of a correction, it also often becomes the catalyst for recovery.

With expectations that the SBV will maintain its accommodative monetary policy through 2024, we do not believe the market has yet reached its true bottom, for several reasons:

1. Core inflation and interest rates have not convincingly declined.
2. Economic growth is likely to recover faster in 2024 and strengthen further in 2025, as FDI enterprises accelerate investment following the upgraded Vietnam–U.S. Comprehensive Strategic Partnership.
3. Valuations and investor positioning still do not fully reflect the market’s capitalization potential.

Volatility around the market bottom often stems from shifting investor perceptions between a soft landing — ending at the policy peak — and a hard landing, which would require lower valuations and coincide with an economic growth trough.

Undoubtedly, uncertainty remains around the SBV’s and the government’s policy direction, as well as questions about whether inflation and interest rates have peaked. Thus, intermittent market swings may continue in the near term.

However, we believe that the strength of the private sector and the absence of major structural weaknesses in the economy imply that this bear market may avoid the severe second- or third-order effects typically seen in structural downturns.

Long-term investors are likely in the best position to ride this trend, focusing on resilience while accepting timing uncertainty.

From a technical analysis perspective, the VN-Index is currently moving within a 5-wave Elliott downward pattern, with a target range of 940–1,020 points. Therefore, long-term investors are advised to accumulate positions when the index approaches this range.