Challenges in finding profitable investment channels

VietNamNet Bridge – Investors who have idle money would find it difficult to find profitable investment channels now. Gold once brought large profits to investors, but gold exchanges have been forced to shut down. Meanwhile, the dollar price has been stable, which means no ‘big waves’ for investors to surf.

Gold and dollar not the big choices

Nguyen Cong Truong, Deputy Head of the Gold Trade Division under the Saigon Jewelry Company, said that the gold purchasing power is too weak, and that makes the market quiet.

Truong said that the volume of gold sold by SJC in April did not increase in comparison to the previous month, which shows that there is no new cash flow running into the gold market.

According to the General Statistics Office, by the end of April 2010, the gold price had increased by 1.9 percent after decreasing by 4.53 percent in mid-April. The reason people are not investing in gold any more is because they cannot borrow money to purchase gold.

According to Huynh Trung Khanh, advisor to the World Gold Council in Vietnam, the world’s gold price is expected to increase. However, the domestic gold price does not have a close link with the world’s gold price. So, while it goes up and down based on the domestic demand, it would be not profitable to invest in gold.

Meanwhile, on investment forums, investors said that the real estate market does not attract them now, because the market remains very quiet with few transactions. Investors do not want to ‘bury’ their money under real estate projects while the market is still ‘frozen’.

As for the dollar, investors do not have high hopes in making big money in trading dollars when the dollar price has been decreasing in the last two months. Director of Economics Pham The Anh from Thang Long Securities Company said that he believes the dong/dollar exchange rate would be stable at 19,000 dong per dollar in the future.

Meanwhile, if people keep dollars and continue to deposit dollars at banks, they will make a modest profit. This is because banks are now paying low interest rates for dollar deposits, from 0.2-0.3 percent per month.

It is not advisable to deposit money in Vietnam dong, because the inflation rate is higher than the interest depositors can get. If depositing one billion dong for four months at 11.5 percent per annum, depositors will get the interest rate of 3.83 percent, or 38.3 million dong, while the inflation rate was 4.27 percent in the first four months of the year.

However, Tran Hoai Phuong, Deputy General Director of Tien Phong Bank said that investors who want to keep money in a ‘safe mode’ should deposit money at banks now, because the interest rates are expected to go down in the future.

Investing in securities? Not an easy way to earn money

The stock market has warmed up after banks loosened their credit policies. The VN Index has increased 41.5 points since early April.

According to Pham Khanh Lynh, Deputy General Director of Vietnam Fund Management VFM, the trading volume on both the HCM City and Hanoi bourses shows that a new volume of cash has been poured into the market.

In February, the average trading volume per trading session was 38.58 securities per day; that figure was doubled in March and tripled in April. In February, the daily trading value was 1554 billion dong only, but it was three trillion dong in March and 3,687.8 billion dong in April.

The warming stock market has prompted people to inject more money into stocks. However, analysts have warned that it is not easy to find good stocks in the market. The stock market will see an increase in supply in the third quarter of the year. Particularly, the supply of bank shares will increase as banks have to issue more shares to increase their chartered capital as requested by the State Bank.