Bond Market and Macroeconomic survey Q3/2021 result



Stability and predictability of macroeconomic environment in which the business operates is fundamental to its success. The COVID-19 pandemic outbreak has been triggering an economic shock across economies globally and the Vietnam economy was not exempt from the adversity stemming from the COVID-19 pandemic. Against this backdrop, there is a need for an assessment that can reflect the effects of constantly changing phenomena in the markets for member’s reference for making decisions.

With that regards, VBMA conducts quarterly survey to get the views of its members on the bond market functioning, outlook on long –term interest rate and macroeconomic indicators. Based on the survey, a result with a structured, systematic and regularly updated data block on bond market functioning, outlook on long –term interest rate and macroeconomic indicators will be provided.

Quarterly survey will be conducted in February, May, August and November. The results will be released in the first week of the following month of the survey. We do hope you find this report useful and valuable source of reference.



Survey of the third quarter of 2021 was conducted in September 2021 with the participation of 51 market members including: 32 banks and credit institutions, 9 securities companies, 8 insurance funds and 2 largest investment funds in Vietnam, of which, 40% of the respondents are active participants of secondary government bond market.

Accordingly, about the operation of the secondary government bond market, 55% of the survey participants said that the market is operating efficiently, and no member believes that the market is inefficient. In terms of liquidity, only 10% of the respondents said that the market has a large difference between the bid and ask prices (from 10 to 30 points) and up to 65% of the members said that their institutions can fill their desired volume of transactions.

Long-term prospect of government bond interest rates: about 61% of survey participants (28/41 members) believe that the yield of 10-year tenor government bonds will rise above 2.5% by the end of March 2023, equivalent to an increase of at least 350 basis points (bps) compared to the current level of 10-year government bond yield. By March 2024, the number of members who believe that the 10-year government bond yield will increase above 2.5% is 76.7% (33/43 responses).

Macroeconomic outlook: 49% of members chose the U-shaped recovery plan for Vietnam's economy with the expectation of a slow recovery as large cities have not yet opened synchronously, as well as, vaccination speed and vaccine supply is limited. Majority of respondents thought that the resilience of the economy will depend on (1) fiscal policy that supports public investment, (2) free trade agreements that help promote exports and (3) mechanism to encourage FDI, FII along with (4) vaccination rate.

81% of survey respondents believe that inflation will increase in the next one year, with the lowest inflation expectation of 2.5%, higher than the average level of the first 9 months of 2021, which is 1.82%. However, in the long-term, all members believe that inflation is not a big pressure, as the market expect the base level of inflation from 3% to 4%/year for the next 3 to 5 years, similar to those of the period 2016 - 2020.

Regarding the policy rate, in general, members expect the SBV to keep or cut the rates within the next one year. Specifically, 64% of members think that in the worst-case scenario, the State Bank of Vietnam may lower the open market rate (OMO) by 0.25% - 1% to stimulate the economy. In contrast, 36% think that the OMO interest rate has bottomed; however, the SBV will not raise the OMO interest rate in 2022.


Please click here to view and download the full result of VBMA Q3/2021 survey: