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Inflation, forex fluctuations expected to stabilise
There will be less risk of inflation and high interest rates next year and the difference between official and open market foreign exchange rates will be narrowed, according to Le Xuan Nghia, Deputy Chairman of the National Committee for Financial Supervision.
The Government would give top priority to tackling infation and foreign exchange problems next year, he said last Saturday on the sidelines of a seminar on opportunities and risks in the stock market in 2011.
Once the inflation problem was solved, the interest rate issue would cool down and the stock market would grow in a more stable manner, Nghia said.
"An increased interest rate (On deposits) usually means a decrease in stock market investment. Higher gold prices and a stronger US dollar (In Viet Nam) have also made investors more cautious, not to mention macroeconomic impacts," he said, explaining why Viet Nam's stock market fell while others elsewhere grew.
He was confident that the world's economic recovery in 2011 would be stronger, that the "dark clouds" above Egypt, Ireland, Spain and Italy would lighten and the Asian economy would continue to develop rapidly, supporting Viet Nam's economic growth.
Nghia also said Viet Nam's stock market had positive factors to attract investors, including the average Price to Earnings (P/E) ratio of around seven and eight compared to the regional average of 17.
However, he agreed speculation played a role in improving liquidity, drawing medium and long-term investors.
"Foreign investors have an important role in Viet Nam's stock market and they are good at economic analysis, thus they will see that medium and long term investment in this country will be more attractive than in other regional markets," he noted.
Over the last three months, foreign indirect investment increased by about 10 per cent each month, Nghia said.
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