A residential area in Hanoi. Real estate becomes more attractive under the low interest rate context. (Photo: VNA)According to Huynh Minh Tuan,Investment Director at Mirae Asset Securities &Investments Company, when interest rates are low, savers will begin to considerand shift their asset allocation. Cash flow is always "smart money"and always looks for more attractive investments with higher returns.
The money can move from the savings channel to other investmentmarkets, such as real estate and stock markets, but there will be a delay. Itmay be a few months late for the real estate channel, but for the stockchannel, it will be faster, maybe from next month, Tuan said.
The activity of transferring savings books has also flourishedrecently. There was a firm that last weekend announced to buy back 1,500billion bonds but only bought back 600 bonds. That shows that investors want tokeep high-yielding assets while deposit interest rates fall deeply. Theinterest rate on this bond is 10.5%, which is 30% higher than current savingsrates.
According to Tuan, some industries will benefit from the interestrate reduction trend.
With the stock market, statistics in the past showed stocksincreased when interest rates were lower. In particular, capital-intensiveindustries such as real estate, securities, banking, and construction materialswill benefit, Tuan said.
According to Tuan, the stock market does not reflect the currenteconomy but shows the economy's expectations for the future. When interestrates decrease, industries, which are expected to be positive, are real estate,securities, building materials, and consumer goods, but all need time.
As for the banking industry, it is necessary to look furtherbecause when interest rates are reduced for a while, bad debts will stabiliseagain.
As for the stock market, experts said the positive point in thecurrent period is that although foreign investors net sold 10 trillion VND, thesecurities market is still sideways or moving in a narrow range. That provesdomestic investors are buying stocks and mainly individual customers, or thecash flow is gradually returning to the market.
According to Tuan, in the current sideways time, investors lookingfor stocks with cheap valuations but cheap prices must be considered by eachindustry and asset. When the stock market moves in a narrow range, it's a goodopportunity to select stocks.
Talking more about stock selection, Nguyen Nhat Khanh, head ofMirae Asset Securities & Investments Company’s Investment AdvisoryDivision, said under the current narrow sideways market, it is advisable tochoose stocks with their own story and belong to the group of small- andmedium-cap because cash flow will not have to spend too much force to push upthe prices of these stock groups.
At the same time, it is not always possible to choose the leadingstocks in the industry, but it is possible to consider choosing stocks thatattract less interest, then the profitable bet will be higher./.
VNA
