A number of economists have said that lowered deposit interest rates will shift capital into other investment channels, including real estate and securities.

Lowered deposit interest rates will shift capital into other investment channels, including real estate and securities

Good signs for securities

Truong Van Phuoc, General Director of Vietnam Export Import Bank (Eximbank), said that the cut in interest rates will help businesses reduce production costs and bring in higher profits, also increasing share value.

According to Dr. Dinh The Hien, lower interest rates is a positive development for the stock market, which has been experiencing a downtrend. He said that, with the new interest rates, investors could look forward to more liquidity in the market.

Dr. Nguyen Van Thuan, from Ho Chi Minh City Open University, made the comment that once banks cut deposit interest rates, lending interest rates will be also reduced, which would in turn facilitate businesses.

He added, however, that more steps are needed to really stabilise the securities market; shares are not attractive enough at present, and the possibility of a sharp rise in their prices in the near future remains modest.

In the past few days the stock market has been showing positive signs. And in a recent meeting between the State Bank of Vietnam (SBV) and commercial banks, the state bank promised to revise its credit regulations in relation to the non-production sector.

According to Truong Van Phuoc, General Director of Eximbank, such a revision would be good for the real estate market.

Warnings about gold and USD speculation

Recently, there has been a spat of speculation investment in gold and foreign currencies.

But many experts have given warnings to currency speculators. Because the SBV has promised to stabilise exchange rates, currency speculators should not expect large, short term profits.

Tran Thanh Hai, General Director of the Vietnam Gold Business and Investment Joint Stock Company said that Vietnam still has a trade deficit; so the value of USD may remain high, but can be kept in control with administrative measures.

Hai added that, although the price of gold has increased beyond expectation, this may not last.