Time for Investors to Turn to Stocks?

The price of gold has fallen, the dollar is sold at jewelry shops for less than at commercial banks and the real estate market is still frozen. Do these factors suggest that this is the right time for investors to pour funds into stock markets which enjoy a rally? The followings are the opinions of a number of analysts about the current situation of the finance market.

Investors have regained confidence thanks to the current rise of stock markets' indexes

Stock markets in the country did get through the most difficult period of their history thanks to continued positive signals generated by the macro economy such as the reduction of interest rates, the fall of the domestic gold price and the continued drop in the world crude oil price, according to Dr. Le Vu Nam of the Department of Economics at the city’s campus of National University,

Despite these positive signals, stock investors, are still looking forward to more effective government policies with respect to monetary tightening as well as inflation curbing to ensure a more stable growth for the market, said Mr. Nam. Any negative information about the national macro economy will force investors to sell shares again.

Dr. Nam emphasized that it’s hard for investors to witness a broad increase in stock prices of the same kind on the market as they did before. In the near future stocks will be divided into two groups. The first consists of those issued by enterprises which have not yet been affected by the current inflation. The second includes those issued by enterprises that have suffered losses from the inflation. Investors will be very cautious when making a decision on buying the second type of stock, added Dr. Nam.

Mr. Nguyen Ngoc Tuoi, general director of the Da Nang Securities Company predicted a good recovery of stock market in the future thanks to the government’s effective policies on controlling the financial market. He pointed out that the government has halted the issue of licenses for establishing more commercial banks. Over VND5 trillion (US$30 million) would have been used as banks’ registered capitals as a result has been returned to investors and invested in stock markets. This timely action of the government, said Tuoi, has helped the stock market have a new source of funds to operate.

Mr. Tuoi hence forecast that the VN-Index will hover between 450 and 500 points in September and this would be a good chance for investors to pour their funds into stock markets.

Ms. Duong Ngoc Thao, deputy general director of the Gia Quyen Securities Joint –Stock Company forecast that in the near future the HOSE index will hover between 450 and 500 and HASTC between 120 and 200. At present, there appears some new groups of investors on market. This indicates the rally of the market as well as the recovery of investors’ confidence.

Ms. Thao divided stocks into several groups. The leading group includes stocks to be traded in large volume. These stocks prove that they have not been affected by the current inflation or by the increase in banking interest rates. Blue chips will be belonged to the group of stocks having a high value. Due to their companies’ unsuccessful business performance during the inflation period, the prices of these stocks have been reduced, but they are still traded at reasonable prices. The last group includes stocks whose prices will rise or fall in accordance with the market tendency.

Ms. Thao predicted that the prices of shares will fluctuate to inflation and the government’s policies on import restrictions. Any cautious investor should therefore apply a strategy of “defensive investment” at this period of time, added Thao.  

By Han Ni – Translated by Phuong Lan

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