Which investment channels will investors pick?

06:00 | 07/04/2021 Economy

(VEN) - Amid the complicated developments of the Covid-19 pandemic and a downward trend in interest rates, the selection of investment channels such as gold, foreign currencies, and real estate dictates investor caution.

which investment channels will investors pick
Bank savings are still an attractive channel

Safe option

Phan Dung Khanh, investment advisory director of the Maybank Kim Eng Securities Company, said safe investment channels include government bonds, insurance and bank savings, while investment in real estate, stocks and cryptocurrencies yields higher returns but is riskier. In reality, risk and returns are directly related, they go hand-in-hand, i.e., the higher the returns, the higher the risk, and vice versa.

Lower deposit rates help banks reduce lending rates, supporting businesses affected by the Covid-19 pandemic in maintaining trade and production activities. However, interest rates for deposit terms of more than a year in some commercial banks are still about 6.8-7.3 percent annually. Therefore, bank savings are still an attractive safe channel, especially during the current pandemic.

With the Covid-19 pandemic gradually being brought under control and inflation rebounding - the consumer price index in February rose by 1.52 percent compared to the previous month, the highest in the last eight years - deposit interest rates are likely to climb again. Therefore, investors can use 70-80 percent of their capital to invest in safe channels, including bank savings. Those who have a good knowledge of investment can invest in stocks, real estate and gold. Cryptocurrencies are also one of the options yielding high returns, but government agencies and experts warn of their risks.

Real estate, gold and stocks

Financial-banking expert Nguyen Tri Hieu said investing in any channel should consider safety, profitability and liquidity. Regarding real estate, despite its low liquidity, it is an investment channel with high profitability if investors can find potential products at good prices and locations. As for gold, the price is expected to bounce back in 2021, making the precious metal a good investment. Prospects of additional stimulus packages by central banks and governments to restart economies in the post-pandemic period will also support the precious metal. However, gold is only suitable for long-term investors and they need to invest when the difference between local and international gold price is low.

Stocks are considered a bright investment channel in 2021. By the end of February, the VN-Index increased by nearly 65 points to close at 1,168 points, an increase of nearly six percent compared to the end of 2020.

Positive growth of the Vietnamese stock market was attributed to the participation of new investors. The Vietnam Securities Depository (VSD) reported a jump in new clients opening financial market trading accounts, with 2.7 million accounts registered in 2020. In the initial months of 2021, 86,269 accounts were opened.

With economic recovery, real estate is a promising investment in 2021. Vietnam’s real estate including industrial land and the housing segment has huge potential. The pursuit by many manufacturers of the China Plus One strategy in order to minimize risks and diversify manufacturing locations will generate greater demand for industrial space in Vietnam, while ground land with the transaction value under VND10 billion remains attractive to investors.

Thanh Thanh