High interest rate is among main reasons that prompt to a prolonged bear stock market, National Assembly delegate Tran Hoang Ngan from Ho Chi Minh City says in an interview with Dau Tu Tai Chinh Newspaper.
|Investors will strongly return to the stock market once interest rate drops and the macroeconomic factors stabilize (Photo: Minh Tri)|
“Share price’s move relies on enterprises’ return-on-equity ratio, which should be higher than bank interest rate,” Ngan says.
“High interest rate will definitely make investors opt for pumping their money into banks. Therefore I think we should not rely on fuel and food price to set up policies on interest rates.”
The price consumer index is meant for the government to design policies on salary, taxes and welfare, he adds.
“The use of capital in the economy, including both public spending and private investments, remains inefficient. For example, many property investments are being unsold,” Ngan says.
“Thus the government will be at risk of suffering heavy debts, if the monetary policy is loosened without a close supervision.”
The NA deputy says the government should asset and rank commercial banks’ safety and widely publicizes the assessment.
He also proposes to evaluate the efficiency of lenders’ credit to stock and property investments.
“The stock market’s liquidity does not rely on bank loans only. Investors will strongly return to the market once interest rate drops and the macroeconomic factors stabilize,” Ngan says.
He notices that the exemption on personal income tax will result in slight impact on the stock market as the tax rate is not high.
“Investors are paying high attention to enterprises’ dividend rate and the deficit between profit margin and bank interest rate,” Ngan says.
“In my opinion, banks should pay depositors at a rate of below 14 percent per annum and charge borrowers 17 percent per annum,”
“The stock market’s growth relies on not only taxes, but investors’ trust also. Investors are retreating from the market, which is still getting sour by manipulation, speculation and inexplicit information.
“Therefore the market watchdog should strictly punished violations to restore the market’s stability.”
Ngan also says that a stable stock market will raise medium- and long-term capital for enterprises, helping the economy to growth strongly.