Finding investment direction for market fluctuations

Banks still have a "headache" selling collateral to handle bad debts. Source: Internet.

Cash flow still goes into the bank

In the domestic market, from the beginning of May 2024 until now, more than 20 joint stock commercial banks have increased deposit interest rates, some banks even increased interest rates 4 times. Currently, many banks list deposit interest rates of over 5%/year for terms of 12-36 months. Along with that, banks also sell deposit documents with interest rates up to 8%/year.

According to experts, bank interest rates have increased again in the context of the hot gold market and exchange rates, so it is necessary to increase the attractiveness of the deposit investment channel. But in reality, savings investment channels at banks are still safe and attractive, especially in the context that other investment channels are still unstable. The financial report for the first quarter of 2024 shows that customer deposits at 18 banks on the stock exchange still grew positively, although some banks still recorded a decrease in deposit balances.

However, the increase in deposit interest rates raises concerns about the possibility of changing monetary policy and affecting the economy, but economist Dr. Le Xuan Nghia commented that the growth rate of deposit interest rates is still at a moderate level, while keeping low and stable interest rates to recover the economy is still an important issue.

Previously, at the end of May, the State Bank continued to require banks to maintain a stable and reasonable deposit interest rate, striving to reduce lending interest rates by 1-2%/year, especially for traditional growth incentives, emerging industries, green transformation, circular economy, social housing... to support businesses and people to develop production and business, increase access to credit capital.

Discussing more about the interest rate situation, experts from Rong Viet Securities Company (VDSC) commented that the State Bank still had room to keep interest rates within a reasonable range through open market operations (OMO). such as issuing bills, pledging valuable papers and selling USD for immediate delivery with the purpose of maintaining a reasonable amount of liquidity instead of the surplus as before, while narrowing the difference between USD and VND interest rates to help the pressure on withdrawing USD to gradually ease before the US Federal Reserve (FED) cut interest rates for the first time.

Similarly, according to experts from VNDirect Securities Company, the State Bank still carried out flexible pumping through the OMO channel, showing that the State Bank was trying to balance the goal of stabilizing the exchange rate and keeping interest rates not to increasing sharply to support economic recovery. Therefore, VNDirect expected the average 12-month deposit interest rate to increase by about 50 basis points by the end of the year compared to the current level.

The high difference between E/P of VN-Index and deposit interest rates shows that the stock investment channel is still very attractive. Source: VNDirect

Reviewing your investment portfolio and being careful with gold

Speaking at the regular Government meeting on June 1, Minister of Planning and Investment Nguyen Chi Dung stated clearly that inflation was an issue that needs special attention and close monitor to have solutions to manage prices closely, carefully, promptly and effectively. The report on price management by the Ministry of Finance also mentioned many factors that put pressure on the price level, including inflation expectations when implementing wage reform and increasing regional minimum wages, rising VND and USD prices increased the cost of importing raw materials, putting pressure on domestic commodity prices, risks of natural disasters and adverse weather...

However, according to the Ministry of Finance, many factors reducing pressure on the price level such as global inflation down in 2024, help Vietnam reduce pressure from the "inflation import" channel; Some tax support policies in 2024 will continue to be applied similar to 2023 such as reducing environmental protection tax on gasoline and oil, reducing value added tax... Along with that is the policy of macroeconomic stabilization, inflation control by the Government helped strengthen the confidence of businesses and people in a stable macroeconomic environment, thereby stabilizing inflation expectations.

In the context of an economy with intertwined opportunities and challenges as well as facing inflationary pressure, the problem of finding an ideal investment channel will be a headache for those who "have money". The "hottest" story today is the story of gold. Despite recommendations from experts and the State Bank about price adjustments following a downward trend, people still line up day and night at banks’ gold transaction places. But clearly, when the State Bank increased the supply of gold bars, the SJC gold price reduced the difference with the world gold price, so the profitability of gold was no longer great.

Dr. Truong Van Phuoc, former acting chairman of the National Financial Supervisory Commission, warned that people need to be extremely cautious because just one move by the Central Bank of China to stop buying gold reserves, as well as many economic variables. in the US and Europe, the price of gold might drop from 80 to 100 USD per night. Meanwhile, the State Bank has sent a message that it had enough resources and determination to stabilize the gold market, so there is a phenomenon of hiring people to line up to buy gold with the goal of pushing up the price, enjoying the difference, and causing instability. market.

In addition, according to Mr. Nguyen Minh Tuan, CEO of AFA Capital, co-founder of the Vietnam Financial Advisors Community (VWA), from the beginning of 2023 until now, gold and stocks are the two assets with the best performance. In particular, gold plays a defensive role, stocks play an offensive role. However, investors should make adjustments based on the prospects of asset classes in the second half of 2024. Mr. Tuan recommended that investors should increase the proportion of deposits because savings interest rates have passed the bottom and are likely signs of a slight increase, while the risk of the bond market is still in maturity pressure, but banks' bond groups can be considered. With gold today, this expert believes that we must be careful because there are many fluctuations.

Along with the above issue, economic expert Dr. Le Xuan Nghia said that investors in the financial market need to review their investment portfolios in the direction that economic will recover, the stock market and real estate market will warm again, and the gold market price will continue to decrease. Furthermore, there is a lot of pressure on inflation, but inflation in Vietnam is quite low, the currency is quite stable and investment opportunities in some asset markets are also recovering quite strongly, such as the stock market, real estate, especially when the Housing Law, Real Estate Business Law, and Land Law approved have been taken effect 5 months earlier, expected from August 2024.