Many wonder how to invest money to get the most profit this year, as the economy remains in difficulty and risks are still lurking. Finding good places to put money to have the biggest profit is always a difficult decision.
There is still a chance with gold
Controlling the gold market is a significant success of the State Bank of Vietnam (SBV) in 2013. In the year, the central bank hosted 76 bullion auctions to offer a total of 1,932,000 taels of gold to the public and successfully sold 1,819,900 taels, equivalent to 69.9 tonnes. Not all the gold went directly to the free market, but banks hoarded 30 tonnes to finalise their gold status. Towards the end of the year, gold auctions were not as tense as previously because the demand slid. The success of the SBV is also the profit of VND8 trillion (nearly US$400 million) from gold tenders.
The success of this agency does not necessarily means the win of gold holders. All those who believed in the rise of the precious metal in 2013 ate a bitter fruit. Last year, the SJC-standard bullion dropped VND12 million per tael. And now, the gap of some VND4 million per tael between the domestic price and the global price is hardly acceptable. In addition to downward tendency, the risk from this terrible difference still looms large.
On the international market, with a drop of 28 percent in 2013, gold fell the most in 32 years. The downward trend is forecast to continue this year. UBS, the biggest bank in Switzerland, anticipated that gold price will slid 13 percent in 2014. US-based investment bank Goldman Sachs predicted that gold price will fall at least 15 percent this year.
For Vietnamese people, gold is a traditional investment and savings channel. Their savings are usually converted into gold. It is not easy for them to give up this deep-rooted habit, especially when gold is proven to be a secure investment channel in the past years. The demand for physical gold is always very high and the price drop may stimulate demand.
In 2014, gold may become an attractive investment channel when its price has dropped while confidence in the local currency value is not high enough. Gold is still on the radar of investors and people who want to ensure the value of their savings.
Securities are always attractive
In 2013, agonising pains experienced from the securities market somewhat alleviated. Although business performances of the business community remained in a predicament, the stock market still maintained growth momentums. According to statistics from the State Securities Commission of Vietnam (SSC), all stock indices increased in 2013. The VN-Index jumped over 22 percent and the HNX-Index rose by 13 per cent. The Vietnamese stock market was one of 10 best performers in the world last year.
The market capitalisation was VND964 trillion in 2013, equivalent to 31 percent of GDP. The average daily trading value reached VND2,578 billion. Foreign investors did not flee as forecast. The total foreign capital turnover increased 54 percent in 2013 and their portfolio value rose by US$3.8 billion over the end of 2012.
The figures prove that Vietnam’s stock market is always attractive to investment capital. The year 2013 was defined as the bottom of economic crisis but the stock market did not increase sharply. So, there is no reason to not pin hopes on an uptrend in 2014 because many important policies in support of market restructuring will take effect. The SSC will continue to complete the derivatives market scheme, set up the Vietnam Stock Exchange and decide the participation rate of foreign investors on Vietnam’s stock market.
At a review meeting held by the SSC in December 2013, Finance Minister Dinh Tien Dung agreed with SSC’s proposals: Speeding up the privatisation and divestment at State-owned enterprises (SOEs) to give a boost to SOE reshuffling. The Ministry of Finance also submitted to the Prime Minister a draft decision on the stockholding ratio of foreign investors on the Vietnamese stock market to facilitate market expansion. These policies will support the development of the stock market right in 2014. Therefore, many are quite optimistic about market prospects.
For domestic investors, the experience accumulated over the past years coupled with painful lessons in a volatile market has made them more seasoned and reduced the herd mentality. Furthermore, investor confidence will be strengthened by market success in 2013, featured by many terrific gainers. For example, Truong Long Engineering and Auto Joint Stock Company (ticker: HTL) soared 304.8 per cent; Petroleum Mechanical Joint Stock Company (PMS) leaped 264.9 per cent; and Thanh Cong Textile Garment Investment Trading Joint Stock Company (TCM) climbed 255.2 per cent. Betting sentiment is always on the stock market; thus, this is still an attractive channel to capital flows this year.
Savings for certainty
SBV Governor Nguyen Van Binh confirmed that Vietnamese dong (VND) deposits were profitable and secured in the latest two years. Therefore, people with unemployed money should choose this channel.
This remark was reasonable as inflation growth was low in the past two years and the risk of dong devaluation was eased. Deposits will are always profitable and risk-free. Savings deposits will ensure stable income for depositors. Indeed, a 7 percent interest rate is not low in the current volatile context.
The banking system’s liquidity is in excess because of good deposits. This shows that putting money at banks prevails over other investment channels like real estate or gold.
Buying real estate for settlement
The primary risk of house purchase is liquidity. The lacklustre market and potential risks inhibit people from buying real estate now. Vietnamese people have a huge demand for housing because this is a place for them to live and a safe investment channel. Nevertheless, the real estate market did not draw much capital last year. Oversupply, due to high prices, or incomplete projects may give rise to a collapse. 2014 is not the year of real estate but there is always a chance with it. This is the good time to pick up cheap prices because many are selling out to get out of the trap. If you have money, you may consider the opportunity in this market. Or if you need to have a residence, this is a good opportunity for you to buy cheap prices and borrow low-rate loans.
Apart from these popular investment channels, when job opportunities are shrinking and incomes are not improved, many may consider setting up private business. The market always has opportunity for creative, passionate and daring people.
Bao Chau
Đăng ký: VietNam News
