Financial glossary
Financial terms economics, finance & investment
Definitions of key economics, investment and finance terms.
C
- Central exchange rate
- The VND/USD rate the State Bank of Vietnam (SBV) publishes every business day, based on domestic and international markets and macro balances. Commercial banks trade within a ±5% band around it.
- CPI
- Consumer price index: tracks the price of a representative basket of consumer goods and services, published monthly by the national statistics office. Its year-on-year change is the headline inflation rate.
D
E
- EPS
- Earnings per share: net profit attributable to common shareholders divided by the weighted average number of shares outstanding.
F
- FDI
- Foreign direct investment: capital foreign investors commit to setting up or controlling businesses in Vietnam. Usually tracked as two figures: registered and disbursed capital.
L
- Liquidity
- How easily an asset can be bought or sold without moving its price, usually measured by average daily traded value.
M
- Margin
- Borrowing from a broker to buy shares, with the shares as collateral. Leverage amplifies both gains and losses; market-wide margin debt is tracked as a gauge of investor leverage.
N
- NIM
- Net interest margin: net interest income divided by average interest-earning assets. Measures how much a bank earns on the spread between lending and deposit rates.
O
- OMO
- Open market operations: the SBV buys or sells short-term valuable papers with credit institutions to add or drain liquidity and steer interbank rates.
P
- P/B
- Price-to-book ratio: share price divided by book value per share. Commonly used to value banks and asset-heavy businesses.
- P/E
- Price-to-earnings ratio: share price divided by earnings per share (EPS). Shows how much investors pay for one unit of earnings.
- Policy rates
- The set of rates the SBV announces to steer market rates: the refinancing rate, the rediscount rate, the overnight interbank lending rate and the open market operations rate.
R
- Refinancing rate
- The rate the SBV charges when it lends to credit institutions against valuable papers. One of the policy rates, it usually acts as the ceiling for interbank rates.
- ROE
- Return on equity: net profit divided by average shareholders' equity. Measures how efficiently a company uses shareholder capital.
S
- SBV bills
- Short-term papers the SBV issues to credit institutions to absorb excess liquidity, typically used to lift interbank rates and ease pressure on the exchange rate.
- Stop-loss
- A preset price at which a position is closed to cap its loss. In risk management, the distance to this level sets the maximum loss and the matching position size.