SSI believed that the current US dollar was nearly 20 percent more valuable than the US dollar at the end of 2011, meaning that the current gold price was close to the historical peak. SSI recommended that gold was also a highly speculative commodity, so investors needed to be very careful with the investment decisions in gold at that time.
Gold is becoming a channel with the best profitability since the beginning of the year until now.
According to SSI Securities Corporation statistics in Vietnam Financial and Monetary Market Report for August, 2019, in the first eight months of the year, the highest profitability of traditional investment channels in both domestic and international markets belonged to gold.
The international gold price increased by 18.5 percent since the beginning of the year, making the domestic gold price also increased by 16%, exceeding the profitability of the stock channel and outstripping the investment channels of bonds, deposits, etc.
The latest sharp increase in price of gold was in the period of 2008-2012 when the United States faced with debt crisis. The US Federal Reserve (FED) maintained a loose monetary policy and weak US dollar. Gold continuously increased, reaching a historic peak of $1,918 per oz at the end of August 2011 (which was 24 percent higher than the current price) and started to decline sharply since 2013.
However, SSI noted that, compared to 2011, the current US dollar was much stronger. If comparing the USD/ euro exchange rate, the US dollar of the current time was nearly 20 percent more valuable than the US dollar of the end of 2011.
That meant the current price of gold was close to the historical peak. Gold was also a highly speculative commodity, therefore investors needed to be very careful with the investment decisions in gold at that time.
In other investment channel, bank deposits, SSI statistics showed that deposit rates in market one (residential and economic organisation market) also increased in recent weeks as the number of banks Commercial banks offering high interest rates for long terms was increasing.
Accordingly, the interest rate was from eight percent to 8.5 percent per year for 12 month-terms and up to over nine percent for terms of 24 months or more through deposit certificate products.
Most commercial banks applied higher deposit rates for individual customers. For corporate customers, interest rates inched up in small joint-stock commercial banks but slightly decreased in state-owned commercial banks and large joint-stock commercial banks, at 4.3 percent to 5.5 percent per year for terms below six months, 5.5 percent to 7.5 percent per year for terms of six to less than 12 months and 6.4 percent to 8.1 percent per year for terms of 12 to 13 months.
SSI forecasted that deposit interest rates would continue to diverge sharply in the near future, depending on the proportion of short-term capital used for medium and long-term loans and the credit structure of each bank. With the same term deposits, the gap between banking groups also widened.
In the stock investment channel, last August, VN Index returned to the struggling trend, the index formed a series of clear gains and drops in the month. VN Index and VN30-Index did not change much in terms of scores compared to the end of July. Specifically, the VN Index decreased by 0.8 percent to 997.39 points while the VN30-Index increased by more than one percent to 892.5 points.
Entering September, SSI believed that the market would continue to face many complicated variables, such as foreign investors’ transactions or macro factors.
According to the assessment of this securities company, international macroeconomic information was becoming more positive compared to August when the US and China just confirmed returning to negotiations in October. Moreover, FED was expected to reduce interest rates during the meeting held on 17 and 18 September 2019
Internal factors such as estimated Q3 business results of listed companies, new informations related to the new three indexes of HoSE would also support market sentiment.
In addition, the most important event in September and also affecting the long-term development of Vietnam’s stock market would be the result of FTSE’s market classification.
