Investment hot spots

Looking back on core investment channels in 2010, deputy head of Central Institute of Economic Management, Vo Tri Thanh said gold was hovering around $1,385 per ounce at this point of time, so investors would only have to wait until the price of this precious metal hit $1,500 per ounce to enjoy a 10 per cent profit margin.

However, he commented that the gold price would be volatile and not only go upward as in the previous year, so that investing in gold would be risky.

Director of the Institute of Applied Informatics and Economic Research Dinh The Hien said the gold price would climb to $1,600 per ounce right in the first quarter of 2011, but it might then be pulled back to $1,200 per ounce when the economy became stable.

Monetary trading is quite a nascent investment field in Vietnam where people still prefer hoarding US dollars. The Vietnam dong-US dollar exchange rate of VND20,400 to VND20,600 per dollar was viewed as reasonable by foreign economic institutions based on current Vietnam’s macro-economy, not including possible shocks which would stimulate dollar speculation or soaring gold prices.

“The possibility of the [Vietnam dong-US dollar] exchange ratio hitting VND23,000 per dollar to generate a 10 per cent profit rate for investors would hardly become a reality,” said Thanh.

Securities trading emerged as a must-watch investment channel since current prices of stocks have reflected past economic uncertainties, Thanh said.

“Actually Vietnam dong credit growth was 23 per cent against projected 25 per cent in 2010,” noted Thanh. “The figure would be further pulled down to below 23 per cent in 2011 and kept as low as 16 per cent within the next three years to achieve the target of sustainable development.”

However Thanh also noted that the time when securities investors could easily gain money rewards was over, and they must now take a cautious approach with any investment decisions.

But what should shares take into account in 2011?

Deputy head of the Asia Commercial Joint Stock Bank’s Securities Company (ACBS) Le Nguyet Anh said the price of many Vietnamese shares was undervalued, however, the stock market would continue to be harmed by macro-economic factors.

Banking groups, such as VCB, CTG and EIB deserved attention, according to ACBS, which also believes foreign investors might pump money into supporting CTG and VCB.

The analytical department under Au Viet Securities Company commented bank shares would gradually resume growth momentum when the interest rate began to fall and smaller banks would mobilise sufficient capital to meet the VND3 trillion ($150 million) benchmark.

In the oil and gas sector, ACBS proposed investors direct attention towards PVD and DPM and anticipated the petroleum sector, particularly oil processing, would have strong growth potential in 2011.

With a cautious approach, ACBS assumed real estate, steel, cement and electricity would not be good investment options at present. Accordingly, property firms would struggle to expand due to high lending rates and restricted access to bank loans.

Au Viet Securities, however, forecast property shares would ebb and flow throughout the year alongside the VNIndex.

Mostly using bank loans for material import, the steel sector would hit by the volatile Vietnam dong-US dollar exchange rate. However, advantages will be on the side of firms strong in billet production and mineral extraction such as HPG, POM and HSG, according to Au Viet Securities’ analysis.

The shipping industry would resume slowly due to market difficulties and it was also adversely affected by the Vietnam dong-US dollar exchange rate.

In respect to future market trends, Au Viet Securities expect the Vietnam’s securities market would fluctuate widely from 480 points to 520 points in early 2011 and would reach 600-650 points by the year-end.