Cash flowing back to stock market
Chuong, a securities investor, has come back to the stock market. He is trying to regain 50 percent of the investment portfolio he lost when the market declined and redeem the house he mortgaged. Many other securities investors, encouraged by the rising stock market, have also returned to the stock trading floors.
Glad to be back
Ly explained that she was trying to purchase shares of Saigon Securities Incorporated (SSI). Previously, Ly had sold her SSI stock, but as she saw SSI prices skyrocketing, she decided to purchase SSI again.
Analysts say that investors have returned to the stock market after leaving the market during its dark days. Now, they have heard about the national economy’s bright prospects. The resulting feeling of confidence has encouraged investors to return to the stock market.
Nguyen Ho Nam, General Director of Sacombank Securities Company, reported that the volume of money investors pay to their accounts has increased by 20-30 percent over two months ago in July. At Indochina Securities (DDS), the everyday cash balance has increased by 1.5 times compared to seven months ago.
According to Vu Tran Duong, Deputy General Director of DDS, most of the money has come from individual investors who kept their money in accounts after they sold their stock to seek new investment opportunities.
The stock market has increased by 140 percent from its lowest point in February 2009. Securities experts, in recent workshops, have attributed the rapid capital turnover to financial levers.
Slow but steady recovery
The lending interest rates applied to securities loans are now really attractive to investors. Ly, for example, said that she now can borrow money from East Asia Bank at 8 percent per annum, or 0.67 percent per month only, while other banks are lending at 1 percent per month.
Loan values provided by banks are generally equal to 50-70 percent of stocks’ market prices. If investors intend to purchase one billion dong worth of stocks, they only have to use 300 million dong of their own, while the remainder is borrowed money.
Nguyen Thanh Ha, the Analysis Director of SSI, estimates that some 19 trillion dong worth of bank capital has been poured into the stock market.
The ratio of securities outstanding loans on the market capitalization value has reached the level equal to 80 percent of the highest peak reached in early 2007 (at that time, the market capitalization value was 25 trillion dong). Ha has advised investors to keep cautious when using financial levers and avoid placing overly high hopes on stock price increases.
Economic analysts say it will take three or five years for big economies like the US or EU to recover completely from the global economic crisis. It took Vietnam four years to recover after the Asian financial crisis and to achieve a growth rate of seven to eight percent.
