Investors had been tired of stocks and real estate
2020 would be a difficult year for cash flows when the efficiency of investment channels tended to decrease and risks tended to increase. In particular, securities and real estate, the two key investment channels, had potential risks that made investors most cautious.
Talking to reporters of the Investment Review, the economist Phan Dung Khanh, director of Investment Advisory of Maybank Kim Eng Securities Limited, said that the global stock market was still quite good this year. Particularly for the US stock market, most of the major indices had increased by more than 20%. Yet, this market had experienced 11 years of increase and was hiding cyclical risks, while liquidity was also decreasing. This statement coincided with the rating of Credit Suisse and Morgan Stanley, as the two financial institutions agreed that in 2020, the US stock market would start plunging.
In Vietnam, the stock market was even worse. From the beginning of the year until then, market capitalisation increased by about 15%, while the liquidity decreased by 35%. The increase in market capitalisation was not due to the rise in stock prices, but because the market had newly listed shares. Lower liquidity indicated that money flowing into the market decreased; investors were less active.
According to a State Securities Commission leader, in early 2018, when the market was going up, less than 10 percent of investors opened accounts with transactions. This year, that number was undoubtedly even less. The market was gloomy when among the investment funds this year, almost no one surpassed the increase of the VN Index, not including management fees, Khanh analysed.
Analysis of Bloomberg data showed that the investment efficiency of a series of foreign funds in the first 11 months of 2019 in the Vietnam market was very low, much lower than the savings interest rates. This could lead to a wave of foreign capital withdrawal in 2020.
While the cash flow trend was fragile, the market had been supplemented by a series of regulations of the State Bank of Vietnam (SBV), which tightened real estate credit and lowered compulsory reserve interest rates with banks. Dinh The Hien, an economist, said that the new policies would cause bank stocks and real estate stocks to continue to decline in 2020.
Although there were still some securities companies that expected the current low price-to-earnings (P/E) ratio to make the market recover by 2020. The rest of them thought that this hope was fierce, especially when real estate was in trouble.
Regarding the real estate market, according to economic experts, the affordable housing segment was in short supply, while other sectors showed signs of speculation, virtual prices, and severe liquidity decline. This trend was expected to continue until 2020. Although house prices were continually rising, this increase was mainly due to investors’ expectations, not supply-demand.
In fact, from the beginning of the year until then, real estate transactions dropped sharply, many investors had to sell losses to pay the bank interest. Figures released at a recent real estate conference showed that the number of property sellers posted an increase of 43%, while the number of interested people only increased by three percent. The SBV’s tightening of real estate credit made the market even more difficult in 2020. The economist Le Xuan Nghia said that 2020 would be a challenging year for investors. It would be not until mid-2020 that investment channels such as securities and real estate could be able to prosper.
Surprise gold, virtual money
Without positive information, the stock market and real estate market in 2020 were believed to inactivate the cash flow. Accordingly, investors would focus on secure channels, such as savings, gold, bonds, some virtual currencies, Phan Dung Khanh commented.
In the market, long-term deposit interest rates were still attractive. Many banks paid 8.5 percent per annum. The fact that the SBV lowered the ceiling interest rate recently only affected short-term deposits. Therefore, interest rates were still a safe and attractive investment channel in the current context.
Another channel of investment that would be selected by many people in 2020 was gold. Since the beginning of the year, the global gold price had increased by 14%, while the domestic gold price had risen by more than 11%. Talking to reporters Investment, Le Xuan Nghia said that, in the context of the global economy showing signs of cyclical decline and the complicated US-China trade war, gold was still a remarkable investment channel in 2020.
However, the most surprising of the investment channels was probably the Bitcoin virtual currency. Bitcoin had dropped sharply in the last three months, but this was the best profitable investment channel from the beginning of the year until then. Specifically, at the beginning of this year, the price of Bitcoin was just over $3,000 per BTC, but it once jumped to $12,000 (a four-fold increase). Currently, Bitcoin had dropped to $7,500 per BTC, but doubled compared to the beginning of the year. It can be seen that virtual currencies were at the top of the table on profit growth this year, according to Phan Dung Khanh.
Some countries were planning to issue cryptocurrencies. Facebook’s Libra is likely to be born. However, Khanh said that Libra was a stable coin, that was not capable of increasing prices and management. That was different from Bitcoin at the fact that no one managed it, and it could raise the prices. Thus, Bitcoin still had its own appeal.
