VN stock market attracts new investors as deposit interest rates drop
Disappointed by modest bank deposit interest rates, people are rushing to trade securities to seek higher profits.
The Vietnamese stock market has been witnessing new records in liquidity set, with trading volumes and value at high levels.
On June 11, the VN Index dropped sharply by 32.6 points to 867 points.
FireAnt reported that more than 700 shares were traded, worth nearly VND10 trillion, the highest level ever seen. In the entire market, trading transactions reached over VND11.8 trillion.
In the first 10 trading sessions in early June, the average trading value at the HCM City Stock Exchange (HOSE) was over VND6.5 trillion, and the average trading volume was higher than the average of level of the previous 20 trading sessions.
Analysts said as bank deposit interest rates are at low levels, the stock market has attracted new investors.
According to the Vietnam Securities Depository Center (VSD), from March to May, 102,700 domestic trading accounts opened, mostly belonging to individual investors.
|In May alone, 34,000 new accounts were opened, a record high number compared with the same period last year. KIS Vietnam explained that domestic individual investors are trying to seek risky assets to offset the low deposit interest rates.|
In May alone, 34,000 new accounts were opened, a record high number compared with the same period last year. KIS Vietnam explained that domestic individual investors are trying to seek risky assets to offset the low deposit interest rates.
Investors believe that they can easily make a profit in the bullish market. They can buy any share to make a profit.
However, Nguyen Kim Chi, director of KIS Vietnam Pham Ngoc Thach Branch, warned that in some cases, investors will also take a loss in the bullish market.
He explained that the sharp increases in share prices may ‘delude’ investors and prompt them to buy these shares, even though this is not the ideal time to buy. In these cases, share prices have become too high to buy, which leads to risks.
“When the market performs very well, many investors want bigger profits, which creates the illusion of power and leads to bad investment decisions,” Chi said.
According to Chi, investors should strive for a 2.5 percent per month profit level.
Nguyen The Minh, director of analysis at Yuanta Vietnam Securities, said there are many opportunities for investors in the post-Covid period to be brought by the wave of relocating factories to Vietnam, the government’s policy on accelerating public investments, EVFTA, and 4.0
The relocation wave is believed to benefit infrastructure developers such as PHR, NTC, KBC and SZC.
Meanwhile, the government’s decision to spend VND700 trillion, or $30 billion, on public investment in 2020 will benefit infrastructure developers and contractors HPG, KSB, DHA, CTI, FCN, and C4G.
The recent interest rate cuts by the State Bank of Vietnam (SBV) have little impact on the Vietnamese stock market.
The Ministry of Finance (MOF) has proposed raising the limit of credit for securities investments as a solution to help businesses seek capital.