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Demand stimulus loans stimulating securities investments?
It has been asked if capital from the demand stimulus programme is flowing into the stock market and helping the market become more bustling as seen in the last two weeks.
The stock market has seen the VN Index increase continuously the last two weeks. Last week saw the highest trading volume under the mode of order matching in the history of the stock market with the buying power of 84mil shares per day.
On the first trading session of this week, April 13, the stock market continued its robust turnaround. Most share items on the two bourses increased in price to the ceiling levels. The VN Index reached 340.01 points, an increase of 15 points over the previous trading session. Analysts say a strong cash flow is running into the stock market, and it is wondered if the cash is coming from the state’s stimulus programme.
Dr Cao Sy Kiem, a member of the National Advisory Council for Monetary Policies, said that in principle, the demand stimulus packages worth $9bil do not include loans to fund securities investments, while state management agencies have not mentioned loans for securities investors.
However, Kiem said that as capital is now profuse and cheap, it is very likely that people are using the capital to surf on the stock market.
In principle, it may happen that people and businesses dodge the laws, borrowing money under the interest rate subsidy programme to make investments in stocks. However, there has been no evidence to confirm this.
However, experts say that in order to ensure that the demand stimulus funds go to the addresses that need the support, it is necessary to strictly control the cash flow into risky business fields, including stocks. The control mechanism needs to be set up by the Ministry of Finance, as the money for the demand stimulus package comes from the state budget.
According to Nguyen Minh Phong, a senior economist, it is highly possible that the capital from the demand stimulus programme is pouring into stocks.
Phong said that investors now can see opportunities in the stock market, while they still cannot see big opportunities in the real estate market and gold market. Meanwhile, commercial banks now have profuse capital to lend, and have been trying to push up loaning.
In principle, businesses are not allowed to use the capital they get for business purposes to inject in stocks. However, in fact, it is difficult for banks to get information about whether borrowers are playing tricks.
Nguyen Son, Head of the Market Development Department under the State Securities Commission, said that most of the money under the demand stimulus programme is going to enterprises’ production, but a part of the capital is going to stocks. In principle, money will go to the place which can bring profit.
In the past, when the stock market was overly hot, some experts asked to clarify how many billions of VND of total outstanding loans went to the stock market. However, it was difficult to separate the kinds of loans, because capital might take a roundabout route to the stock market.
Meanwhile, some experts say that there is no need to worry if the capital under the demand stimulus programme is going to the stock market, as the market is a field which gets benefit from the programme. They say that if banks control risks, nothing bad will happen.
Foreign investors sold a lot of share items like SAM, BVS and ITA earlier this year at dirt cheap prices, which were then purchased by domestic investors. It is expected that the demand will keep increasing next week as the market is being buoyed by good information from the domestic and world’s markets.
VietNamNet, NLD
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