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Money will flow strongly to stock market
A money flow is running to Vietnam’s stock market cautiously but determinedly, according to Le Xuan Nghia, a well known economist, now Deputy Chair of the National Finance Supervision Council.
The most important information that Nghia released in the workshop discussing the opportunities and risks of the national economy in 2011 held on December 18 was that the government is considering setting up a steering committee in charge of dealing with the current macroeconomic uncertainties, such as the high inflation rate and the dollar continued price increases.
“I hope that the national economy will see positive changes in 2011, when the government will not regulate the national economy with administrative measures, but only use “market tools” to foster the national economy particularly the stock market,” he said.
“Though there are still some risks, with the plan to settle problems and the drastic measures by the government, I am optimistic about the performance of the national economy in 2011,” he affirmed.
Bank interest rates will go down in Q1
“I have conducted research on the stock market and the finance market and I believe that there will be no big risks in the next five years,” Nghia said. “The government is concentrating on settling macroeconomic problems”.
Dealing with the dong/dollar exchange rate proves to be the most difficult problem. In theory, it is necessary to raise bank interest rates in order to cool the exchange rate. However, it is not advisable to raise interest rates in current conditions, because with the current interest rates, depositors can enjoy the positive real interest rate of five percent already. Meanwhile, overly high interest rates will make businesses unable to expand production.
The policy advisory agency is building up a plan that will both to stabilize the exchange rate and keep the interest rates at reasonable levels, under which the State would intervene the market by selling foreign currencies, and then will gradually lower the interest rates from the second quarter of 2011. Nghia said that the priority solutions will be narrowing the gap between the Vietnam dong and dollar interest rates and easing the dollarization in the national economy.
Nghia believes that the problem of exchange rates may be settled by the first quarter of 2011. By that time, it will be safer to invest in securities.
The world’s economy will see strong growth
Many economists have forecasted that the world’s economy will see a period of strong development in the upcoming two decades, until 2030. In 2008-2030, there will be two big economic recessions. One of the two took place already, and the other may occur in 2018, but it will not be too serious.
“There are still some dark clouds on European sky, but the Asian sky has become really radiant,” Nghia said.
Capital will flow to stock market
All three panel speakers at the workshop believe that the capital will flow to Vietnam’s stock market in 2011.
Le Dat Chi from the HCM City Economics University, said that the capital flow will heavily depend on individual investors. They will prepare to inject money in stocks, but they will stand outside the market if they feel insecure. If the interest rates continue to be high, money will not flow to the stock market.
Chi said that the stock market is now in a “sensitive period”. The market may go up, but there is still possibility that it would go down in June-September.
Meanwhile, Nghia said money flow is running to Vietnam’s stock market cautiously but determinedly.
vietnamnet
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