At a seminar on private investment management in a flexible environment held by Dau Tu newspaper recently, economists and businesses discussed private investment channels and real estate.

High risks

Le Xuan Nghia, a respected economist, said that private investment channels in recent years include corporate bonds, real estate, securities and cryptocurrencies. The investment channels are bearing pressure from global inflation and political and economic uncertainties.

In terms of the real estate market, Vietnam has reached an alarming rate if considering the criteria set by the International Monetary Fund (IMF).

According to the financial organization, if workers with an average income have to use 30 years of wages to buy an apartment, this indicates a sign of a real estate bubble. Meanwhile, in Vietnam, average income earners have to spend 57 years of savings to buy an apartment.

Real estate transactions recently are mostly carried out among project developers and secondary investors (speculators), while the number of transactions of people buying housing products for their own accommodation is very modest. This is an indicator showing that a risk of a real estate bubble exists.

The corporate bond market still has not recovered yet and investors’ confidence is very low, so its potential is unstable. Analysts have warned of bond default risks associated with real estate bubbles.

As for the stock market, with the ‘follow-the-crowd’ speculation, the prices have been pushed up sharply, while the financial situation of many companies faces problems because of Covid-19.

The cash flow statements of many companies show problems, which has led to legal consequences. The market has declined and many small investors have fled.

The cryptocurrency market is in the same situation. The follow-the-crowd investment has pushed the prices of many cryptocurrencies to sky-high levels. 

Meanwhile, inflation and recession in the world, and especially energy, food and geopolitical crises, all have caused panic in the market. The prices have dropped dramatically and investors have lost hundreds of millions of dollars.

The asset market is an investment market with very high expected return on capital, but the risks are very high. This is a market prone to manipulation and it cannot be controlled well, and may collapse. Nghia advised investors with small investment capital to be cautious when making decisions.

Where to invest?

Nguyen Van Ngoc, president of RB Group, said the real estate market is facing serious difficulties. Realtors lack capital to develop projects, while many banks are running out of credit ‘quotas’, so they cannot disburse more money. As a result, people cannot borrow money to buy houses.

The transactions in the market have declined recently and analysts warned that the situation will be even worse in the time to come. Now is not the time to surf on investment and use too much financial leverage.

However, it’s the right time to make medium investments. The properties in the areas to enjoy benefits from public investments have high potential, because capital disbursement for public investment has never been so high before.

In addition, real estate in areas with specific advantages also deserve investments, according to Ngoc.

As for securities investment, according to Tran Duc Anh from KB Vietnam Securities, the major driving force of the market in H2 will come from the good resilience of the national economy amid increased pressure from outside, and profit increases of listed companies.

At present, the valuations in the market are at low levels, while the profits of many listed companies are good. The shares of enterprises in the retail and banking sectors are expected to enjoy benefits in H2. 

The statistics show sharp increases in total retail turnover of goods and services, which means good news for retail shares. However, not all businesses will enjoy benefits.

However, analysts warn that retail share prices have become high, while high inflation will affect consumers’ purchasing power.

As for the banking sector, despite short-term risks related to credit ‘room’, bad debts and bonds, it still has a bright future as Q2 reports show improvement in asset quality and profits.

Meanwhile, new investment channels related to technology and the use of algorithms are not suitable to all investors. 

Nguyen Thi Hang Nga, deputy CEO of Vietcombank Fund Management Company, noted that many individual investors don’t understand financial reports of bond or share issuers. She advised them to make investment through professional institutions.

Tran Thuy