Investors seek alternative channels as rates drop

September 13, 2011 | 10:50

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With profits from bank savings down as rates on deposits have been cut, many investors are considering transferring their money to other channels such as gold, stocks, and foreign currencies.

For economic expert Dinh The Hien, the reduced deposit rates are good news to stock investors.

Since the saving rates were losing its attractiveness, people would turn to other investment channels, including the stock market, he explained.

“The new investment flow will help increase the stock market’s liquidity,” he said.

Doctor Nguyen Van Thuan from the Ho Chi Minh City Open University said lending rates would soon fall down along with the lower deposit rates.

This would have positive impacts on the operation and production of the businesses and would bring better business results for the listed companies, he said.

However, Thuan added that the stock market still needed other factors for revitalization and it was still not appealing enough.

“The unstable macro-economy, high inflation and the businesses’ internal problems are what make investors hesitant in sending their money to the stock market,” he said.

Meanwhile, many investors have invested in foreign currencies with the hope of earning profits when forex rates soared at the end of the year.

However, analysts warned that it would be unlikely for investors to earn from the exchange rate fluctuation as the State Bank of Vietnam had affirmed that forex rates would be managed in a sustainable way.

The national foreign reserves have been restored and the central bank is capable of intervening to stabilize the market, they said, adding that forex rates would be hiked by no more than 1 per cent as ordered by the central bank.

As for gold investment, Tran Thanh Hai, CEO of the Vietnam Gold Business Corporation, also warned investors to be careful as gold recently followed an unpredictable development.

For his part, economic expert Huynh Buu Son said bank savings were still an attractive investment channel.

He said the deposit rate of 14 per cent a year was not too low and it was suitable for people with investment of less than VND200 million, which was not enough to invest in real estate.

It was also more profitable than deposits in foreign currencies with the saving rate of only 2 per cent a year, he added.

Truong Van Phuoc, CEO of Eximbank, also said lenders could still earn profits with the current deposit rate as inflation was likely to soar in the coming time.