“Wealth is known for sure on the last day of the year,” a Vietnamese proverb says. When the year ends, we will know what we have, what we have achieved or lost. When the year starts, we will envisage what we will do and how we will do to keep and increase our money.
Companies will find it hard with production and business expansion plans or new investment projects because of low inflation, unchanged prices and difficult sales. Hence, according to many specialists, businesses are unlikely to make great strides this year. People with unemployed money are definitely considering investment channels.
Gold: Falling into disgrace?
Vietnamese people like gold. For a long time, the precious metal is not only a nest egg but also an investment channel for profit. But, in recent years, keeping gold became a distress for many. Bullion price slid to the lowest level in six years and the downward trend keeps going on. Now, even housewives also know interest rate hiked by the US Federal Reserve (Fed) and gold price slump. Indeed, gold is falling into disfavour.
Despite political turmoil around the world and spreading information about explosions, terrorist attacks and airstrikes, gold still loses lustre. Is gold no longer a safe haven as mankind faces war and instability? This is totally different from a few years ago, when political tumult was an important reason for gold price to go up.
In the domestic market, bullion is stripped off as a second currency. People do not value real estate in gold as earlier. Gold is taken out of the banking system and banks are forced to terminate gold mobilisation and lending. Confidence in the domestic currency is not necessarily high but gold has apparently lost its lustre.
In 2015, gold price dropped more than VND2.4 million per tael. Most of gold buyers suffered losses because gold ingot nosedived. This year, gold price is estimated to go down further and is a test to those who still believe in gold.
Securities: Big risk is not necessarily coupled with big profit
Last year, securities were expected to be the goose that laid the golden eggs when bullion price slumped and US dollar was volatile. However, China devalued its yuan, Vietnam raised exchange rates, the US Federal Reserve raised interest rate and stocks were volatile. VN-Index rose 2.15 per cent, far lower than expected.
The stock market started 2016 with an unbelievably bad performance dragged by huge drops in China. The market was hit by big shocks from falling oil prices, China’s continued yuan devaluation and global stock slumps.
This year, the most optimistic investors will still expect from the departure of foreign investors from China’s risky stock market to Vietnam. Compared with other countries in the region, Vietnam’s stock market is still considered strongly attractive to investors.
With mounting volatility and uncertainty on global markets, the courage of many investors has weakened when they decide to seek profits from stocks. But, the capital market is difficult to predict. Many will be still greedy when others are scared.
USD: Zero interest
The State Bank of Vietnam (SBV) scrapped interest rates on personal dollar deposits from December 18, 2015. However, hoarding dollar is also a profitable investment channel as the exchange rate is forecast to rise this year. With a hike of 2 per cent and a trading band of 3 per cent on either side of midpoint, many banks quoted the exchange rate at the upper limit. As of December 24, the ask rate of dollar/dong was quoted at 24,547. Compared with the start of the year, dollar keepers enjoyed a net margin of 5.34 per cent, a quite good level.
With the daily exchange rate adjustment policy currently applied by the SBV, dollar fever will not occur as in previous years. Dong is forecast to lose its value bit by bit and dollar keepers will still take a margin of 3-4 per cent, according to some experts.
Property: Long-term appeal
Last year, property investors enjoyed good incomes. The property market recovered strongly on good policies and improved liquidity. Many real estate companies boasted huge profits. This is an investment channel for cash-profuse and patient investors. For real estate, a clear trend and profitability are only seen in a cycle of 3-5 years.
Bank deposits: Easy and profitable
This year, bank deposit is still a safe channel as interest rate is unlikely to fall any further. Financial experts anticipated that savings are the safest investment channel when others are still risky. Since mid-2015, some banks raised interest rates for long-term deposit options. At present, 12-month deposits are offered an interest rate of 7 per cent per annum.
With this profitability ratio, deposit is an effective and most stable investment channel in 2015 relative to stock, dollar and gold.
Bao Chau
Vietnamese
