VietNamNet Bridge - If capital outflow returns to Vietnam in 2016 thanks to global integration effects, the Vietnamese stock market may become more attractive than last year.

 

Nguyen Thanh Phuong, a stock investor in Hanoi, said he has been ‘sitting idle’ for the last two weeks because the stock index had decreased continuously, the liquidity was low and the investors’ confidence was low.

“I have stopped all transactions, keeping money in accounts. I now just wait and see,” he said.

When asked why he decided to stay outside the market, Phuong said he was insecure about the exchange rate policy. Besides, the oil price fall and the Chinese economy are also factors.

The State Bank has applied a new exchange rate policy, under which the dong/dollar exchange is adjusted daily.

The State Bank has applied a new exchange rate policy, under which the dong/dollar exchange is adjusted daily. 

Therefore, keeping a close watch over the dollar price has become something securities investors do daily, together with keeping watch over the stock price performance. 

“If the dong loses 5 percent of its value, this means that my stock assets would lose 5 percent of value,” he explained.

Meanwhile, Vietnamese investors like Phuong now see  foreign investors selling stocks in large quantities. Analysts noted that foreign investors were withdrawing money from emerging markets, including Vietnam.

The new forex policy has helped the dollar price become stable in the last two weeks. 

However, if the oil price continues to fall, and if Vietnam continues importing more than exporting, the trade gap will affect the forex reserves and put pressure on the exchange rate.

Can Van Luc, a renowned banking expert, also said the dollar appreciation and the Chinese renminbi devaluation have both put pressure on Vietnam’s forex policy.

As the US FED has adjusted the dollar prime interest rate, this affects both the government and business mobilization of capital for implementing investment projects.

Meanwhile, the world’s stock markets have become unpredictable due to problems of the Chinese stock market.

The continued oil price fall will have a major impact on Vietnam in many fields, from trade and investment to securities.

“The macroeconomic factors are unpredictable. They need to be considered thoroughly by investors before making decisions,” Luc said.

When asked which investment channels would be attractive in 2016, Luc said the stock market would bear big influences this year.

If the capital outflow from emerging economies returns to Vietnam thanks to global integration effects, the Vietnamese stock market may become more attractive this year.

Deposits are a good choice for investors, as the deposit interest rate of 6 percent is attractive.


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