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Where is the cash for stock investments coming from?
The VN Index has been breaking barriers on its march to the 450-point threshold. It is now not a surprise at all to see a trading session with the trade volume of 1,500 billion dong, while some trading sessions have even seen the trade volume of 2,000 billion dong.
The HCM City Stock Exchange is matching orders for the trading of 50 million shares a day. The volume of shares ordered for purchase even reaches over 100 million shares some days. The HCM City bourse did not witness such ‘beautiful figures’ in March 2007, when the VN Index remained at over 1,000 points.
The stock market has been warming up on this strong cash flow. But the question has been asked: Where is the cash coming from?
On ACB Securities Company’s trading floor, a young man was seen opening an account and putting 2 billion dong into the account for transactions. A woman said she had transferred 1 billion from her savings account at the Military Bank to her account at ACB Securities Company.
The woman smiled happily: “I have said goodbye to the OTC market and gold trading floors. I have decided to inject all my money in listed stocks.”
ACB Securities Company said that a lot of investors have opened new accounts at the company since early May, put cash into the accounts and are ready to make transactions when they see opportunities.
These investors have been dubbed the “young capitalists”, and they are one of the driving forces behind the development of the stock market at present.
“Young capitalists” -- who are they?
These young investors earned money from the stock market two years ago, and then turned the fat profit into gold, dollars and real estate.
They now are returning to the stock market with it showing signs of recovery.
Tran Nam Trung, an investor on VNDirect Securities Company’s trading floor, related that he sold two land plots in Ha Dong city for three billion dong, which is enough for him to join the stock market.
“The real estate market remains cool, while bank deposits have low interest rates, so I have decided to inject my money in stocks,” he said.
Hoai Anh, an investor on Wall Street Securities Company’s trading floor, revealed that she and her friends several months ago traded gold, but they have decided to make investment in stocks as they believe there are fewer risks with stocks than with gold.
“The most difficult period of the national economy is over. There are signs the VN Index will continue increasing, while stock prices are cheap,” Anh said.
Money from investment funds
Trinh Thanh Can, Analysis and Investment Director of Ban Viet Securities Company, believes that one of the sources of the cash flowing into the stock market is investment funds.
When stock prices began decreasing dramatically last year, investment funds got cautious and began selling stocks. Now, with the stock market showing signs of recovery and stock prices “soft”, they are under pressure to disburse the money they accumulated.
Nguyen Son, Head of the Market Development Division under the State Bank of Vietnam, in a recent talk with the local press, said that foreign money was not withdrawn from Vietnam in the gloomy period of the stock market; and that foreign investors will begin purchasing stocks now for their new investment portfolios.
Domestic securities companies have announced they have big sums of cash and are planning to invest in stocks. Saigon Securities Incorporated, for example, has said it has 800 billion which will be injected in shares. Meanwhile, ACB Securities and Sacombank Securities also said they are holding volumes of cash or government bonds equivalent to several billion dong.
Money from interest rate subsidy programme?
Whether or not capital from the interest rate subsidy programme is flowing into the stock market has been a hot topic in recent meetings among banks, the Securities Commission, investors, enterprises and economists.
In fact, economists have a legitimate reason to believe that capital from the programme is being used for securities investments, rather than for the expansion of production and business.
Right after the subsidisation programme was initiated through commercial banks, the stock market began warming up.
However, to date, government agencies still do not have enough proof to conclude that preferential loans are being used for securities investments.
VietNamNet, VnMedia
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