VietNamNet Bridge – The market is volatile and has potential risks, making investors to be increasingly cautious. Their top priority at present is probably not to “make money from money," but to preserve their capital - a negative signal for the economy.

Be cautious with investment channels

The stock market on the morning of July 1--the first trading session of the new quarter, was very bleak. Only about 10 million shares, equivalent to more than VND70 billion ($3.5 million), were traded on the Hanoi stock exchange.

In the HCM City stock exchange, nearly 19 million shares were traded, equivalent to over VND280 billion ($14 million); only about 20-30 percent compared with the first session of the year.

Liquidity decline along with the fall of the prices of majority shares reflected the investor’s discouragement and even depressed the market.

Before that, when foreign investors massively sold their shares, the VN-Index fell nearly 10 percent. However, this does not encourage investors to buy.

In the current context, investors do not dare to take risks, because even though the government has eased the monetary policy with reduced interest rates and launched the stimulus and bailout programs, businesses still have a lot of difficulties such as lack of capital, inventory, debts, etc. Moreover, while inflation is kept relatively stable, businesses still face the increase of prices of other inputs such as gasoline, gas, electricity...

Many investors are afraid that when the stock market is "sleepy" like this, the value of shares will decrease each day and their capital will be “eroded.”

In the gold market, after a few hot trading sessions, the purchasing of gold fell sharply in the early trading session of July. Caution when deciding to buy gold becomes clear at the largest gold trading centers in Hanoi and HCM City.

At present, the gold price in Vietnam is still high compared to the world market - approximately VND5.5 million ($250)/ tael higher and this is still risky for buying gold at this time.

Many experts believe that the price for gold in the world market is still on the downtrend, while it is more likely that the State Bank of Vietnam (SBV) will have additional measures to control the gold market.

The other investment channels such as real estate, USD, savings are not really attractive. The estate market is very dull while the interest rates of the USD and the VND have reduced.

Concern over slow economic recovery

From the beginning of the year there are positive signs for the economy such as the stability of inflation, exchange rate and the increase of credit back... However, many fear that the pace of economic recovery will be slow.

According to a survey by HSBC, the Purchasing Managers Index (PMI) – an indicator of the manufacturing sector of the economy fell sharply in June, to only 46.4 points, lower than the average of 50 points. This is the second consecutive month with the decline PMI.

The results show that the number of new orders fell sharply in June. Along with that, the amount of finished goods in inventory increased with the fastest pace in the last one year.

According to HSBC, the decline of domestic demand is the main reason for the PMI decline, rather than a decline in the number of export orders. It is important that increase in inventories can make the decrease of output in the coming months. The reduction of employment in the second consecutive month may also affect the domestic demand.

What investors are interested in is economic recovery.

The investors are waiting for concrete steps, concrete results of the newly issued policies and measures to settle non-performing loans, to revive the estate market and product before they make investment decisions.

Huan Tu