Do not "put all your eggs in one basket" as several investment channels appear promising

Dr. Can Van Luc, Chief Economist at BIDV, and member of the National Financial and Monetary Policy Advisory Council.

According to you, what constitutes an effective investment channel in the current context?

A crucial principle in investment is the need for diversification, meaning investing in various ways and not "putting all your eggs in one basket." This principle is steadfast. However, in the current context, numerous investment channels seem quite promising.

Among them, the savings deposit channel continues to offer a relatively attractive interest rate of around 5-6% per annum for a 12-month term, which is likely to remain at this level. Following this is the stock market, which has been and continues to recover positively. The stock market has witnessed a relatively positive recovery since the beginning of the year, though some sectors are performing well, while others are not as robust.

The real estate channel clearly exhibits many positive signs, notably in the industrial and residential real estate segments. Particularly, given the current income and demand of the populace, the real estate market is experiencing a supply shortage, with prices in some segments expected to rise in the future. Additionally, there are other investment channels such as gold and digital currencies. Moving forward, the Government and the State Bank of Vietnam (SBV) will decisively act to diminish the economy's focus on gold.

Alongside this, they must implement a variety of fundamental solutions that experts have repeatedly recommended, including increasing supply, eliminating the monopoly aspect, amending Decree 24/2012/ND-CP on managing gold trading activities, and modifying regulations on the import and export of gold, etc. The digital currency investment channel is extremely risky due to its lack of a legal framework.

Returning to the topic of bank deposits, with interest rates on the rise, how do you think this will affect the overall interest rates from now until the end of the year?

Vietnam's interbank interest rates have been increasing quite swiftly lately, which helps alleviate exchange rate pressures. Deposit interest rates have also risen, driven by the greater appeal of other investment channels, leading to a shift of investments away from banks. Naturally, this amount is not substantial, as personal deposit investments have continued to show positive growth in the early months of the year, with only corporate deposits decreasing due to the need for funds for debt repayment or reinvestment in business operations—a positive sign for the economy. Therefore, in the coming period, interest rates are expected to remain stable or may slightly increase at certain times, especially during seasonal periods when credit demand is higher, potentially seeing a significant rise from the third quarter of 2024. However, in that scenario, lending rates will still strive to remain stable as directed by the Prime Minister and the SBV, even aiming to reduce lending rates through policies related to reducing input costs, thereby helping to narrow the Net Interest Margin (NIM) of the banking system to possibly 3% or below.

The corporate bond investment channel has recovered better since the beginning of the year but has still not met expectations. What do you think are the solutions to develop the corporate bond market?

Current data shows that the amount of corporate bonds issued by the end of April 2024 increased by 22% compared to the same period last year, which is a positive figure. This trend may continue as the banking sector begins to issue more to attract Tier 2 capital in compliance with Basel II and Basel III standards. Moreover, the confidence of investors, including organizations and businesses, has gradually returned, along with the increasing demand for capital, especially medium and long-term capital for businesses as the economy recovers, which is very high.

Therefore, to further develop the corporate bond market, it is essential to continue amending policies and laws. The regulatory authorities are currently reapplying Decree No. 65/2022/ND-CP, which regulates the private placement and trading of corporate bonds, aiming to tighten the corporate bond market further. I believe these regulations need to be reconsidered and adjusted progressively to suit the new context, both supporting market development and ensuring safer and healthier operations. Along with this, it is vital to enhance information and data infrastructure, diversify the investor base, etc., to increase resource attraction to the corporate bond market.

Thank you, Mr. Luc!