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Vietnamese people search for new investment channels

The low yields of traditional investment channels, such as gold, real estate and deposit accounts, have left Vietnamese people looking for a place to keep their money.


The drop in bank interest rates has posed a big problem for Nguyen Dinh Hoan, of Hanoi. He and his wife, both retired, live on the interest of their pension. They also lease their old apartment for VND4 million (USD190) per month.

Hoan said last year he earned VND33 million (USD1,500) per month, when interest rates were around 20%. This year he had to switch to smaller banks to receive an additional 3%. Since interest rates have been lowered to 9% his income has fallen to VND18 million (USD858) per month.

"I don't invest in securities. I don't dare to risk my money in real estate market. I intended to invest in gold if the price drops to around VND40 million (USD1,900) per ounce but it keeps rising," Hoan said.

In the past, when bank interest rates are reduced people would move their money to gold or foreign currency. But these investments have not been yielding much return. Also, the slump in the real estate market has been keeping potential investors at bay.

Minh Phuong, also of Hanoi, planned to use VND800 million (USD38,167) to buy 750 grams gold. "I scrapped the plan because the domestic gold price is VND2 million (USD95) higher than the world price. I also heard that the Government plans implement policies to tighten control over gold trading, which will depress prices. Foreign currencies do not give much return, so i just keep the money in the bank," she said.

The securities market has not been faring much better. The volatility that has driven many investors into bankruptcy has been warding off new ones.

As a result, many prefer the safer option of long-term deposit accounts.

Though the banks can negotiate interest rates with clients for accounts with terms of over 12 months, most banks keep their rates close to 9% and the ceiling at 11%. Still, this appears to many to be the most attractive option.

The head of VP Bank said that last week many people changed to long-term deposit accounts because they are more stable than other investments. Meanwhile a representative of Techcombank said that over the last six months individual depositors have been turning their backs on USD.

Nguyen Duc Huong, Deputy Head of Lien Viet Post Bank, said VND can earn the most profit with the new interest rate, inflation is expected to be 8-9% and the interest rate for USD to be only 2%.

The deputy governor of Sate Bank of Vietnam confirmed that since the interest rate and foreign currencies are expected to be kept stable, VND accounts are the surest way to make a return.

Source: Saigon Times


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