Which Is The Most Attractive Investment Channel?

Gold, real estate and stock are the most popular investment channels in Vietnam. Vietnamese people have a habit of hoarding gold for a long time. On average, each household keeps at least a half or one tael of gold. Even, a well-off family keeps hundreds or even thousands of tael of gold. Apart from holding highly valuable assets like gold, many families hoard the US dollar. Ms Nguyen Thi Minh, a retired employee at Thang Long Garment Company, said: “Although we are manual workers, we always save the money to buy gold. When gold price falls, we buy and wait for a higher value to sell to take profit. This is the best way for us to supplement our low-paid salary and it more importantly does not lose the intrinsic value.” In fact, this is one way of gold investment of Vietnamese people though the individual investment is small. Psychologically, people lack confidence in keeping the paper money on fears of devaluation.

When the gold price soared last year, people began seeking for residential land plots. People without enough money sold their houses to take capital for investment in residential land. A three-storey house measured 30 square metres in a deep alley on Minh Khai Street, Hai Ba Trung District, Hanoi costs up to VND2.5-2.7 billion. When the reputation of apartment waned due to two fires, residential land in Lang - Hoa Lac area soared to VND7-22 million per square meter. The price difference depends on many factors, including construction permit and legality of the project.

As regards securities, this is the most popular investment channel in previous years with people coming from all walks of life. However, in 2009 and early 2010, the stock market was a playground for professionals.

Dang Thanh Tam, President of Saigon Invest Group (SGI) - the richest man on the Vietnamese stock market in 2009 with share value reaching VND13,725.4 billion, said: In 2010 when the economy revives, gold price will slide. Thus, in the second quarter and afterwards, the gold price is forecast not to rise further. “In my opinion, from the second quarter onwards, the real estate price will soar," Mr Tam said.

When the real estate price grows up, property companies will expand and the stock market will balloon. “Especially, when margin gold trading floors are closed, cash flows will be channelled into the stock market,” Tam predicted. By late 2010, the VN-Index, the gauge of the Vietnamese stock market, is expected to reach 750-850 points.

Mr. Don Lam, General Director of VinaCapital, said: Most attractive fields in 2010 include healthcare services, consumer goods manufacturing, financial services and energy. Real estate investors should pay attention to residential areas for the middle class and shopping areas. However, in fact, investors in Hanoi are following upscale and low-end segments while making light of middle-range segment. The same situation also happens to restaurant and hotel market. Investors only focus on high-grade or low-grade restaurants, not middle-class. Unlike in Hanoi, investors in Ho Chi Minh City invest in all market segments.

According to a VinaCapital report which was built on financial data for short, medium and long-term analysis, retail shopping areas will be heated up by the end of 2010.

The trend is world countries like the U.S. population is 80 % shopping in supermarkets, 70 % to Europe, China is 12 %, while Vietnam had only six % of the population to the supermarket. This is a great potential to expand investment in retail sector in Vietnam. In the world, up to 80 % of Americans shop at supermarkets while the rates are 70 % in Europe, 12 % in China and only 6 % in Vietnam. This is a huge potential for expanding investment into retailing market in Vietnam.