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Real Estate Remains Safe Haven In Difficult Time

Real Estate Remains Safe Haven In Difficult Time [10/05/11] With gold trading getting quiet, savings only good in long terms and bearish stock market, the property market remains a safe haven during the current difficult time, said economists. Many financial experts expect that the property market is still growing and will do so in the next 50 years, but its liquidity will surge in the next 10 years with a growth rate of about 50-100 percent.

“Many investors have shifted their money to real estate market since the government released strict supervisory on dollar and gold trading,” an expert told Dau Tu Tai Chinh Newspaper. Statistics released at a conference on housing development by 2020 in March showed the housing demand remained very high, with a shortage of nearly 20 million houses nationwide.Some analysts said the property market was a safe haven during the current difficult time with accelerating inflation. “Property prices almost remained unchanged while most of input costs including gasoline, electricity, materials and lending rates moved up. Therefore, property is getting an attractive investment class,” said an expert in Ho Chi Minh City.

Quiet gold trading

Investors, meanwhile, have shown no interest in gold due to the government’s measures on curbing the precious metal and dollar trading on the so-called black market to restore the stability of the economy.  “That is why the domestic gold price has been in contrast to the global one recently. Earlier, the domestic price used to move up sharply on the international slight increase,” said a gold shop owner.  “Many investors are unwilling to pour their money into gold as they expect the domestic price will continue to make converse moves with the global once. Gold shops also stopped speculating in gold due to a similar reason.  Gold price on the international markets powered to a new high of US$1,577.57 an ounce, before swinging sharply back to the $1,555 level, according to AFP.  Saigon Jewelry Holding Company, Vietnam's largest gold merchant, announced on its website that the yellow metal's prices amounted to VND37.79 million ($1,890) per tael in HCMC and VND37.81 million in Hanoi. A tael is slightly more than 1.2 troy ounces. 

Chances from dong deposit

Economist Huynh Buu Son said depositors were earning good money from their savings in Vietnam dong as the central bank released series of measures to encourage people to opt for depositing dong, including high saving rates and cutting saving rates on dollar.  Experts expected that the greenback would get weaker than the dong as people became eager to sell dollars to banks.  Tran Anh Tuan, general director of NamABank, said the central bank’s foreign exchange rate measures got positive result as individuals and businesses preferred to sell US dollar to commercial bank.  Many lenders have widened the deficit between the selling and buying price of the greenback to VND20-25, showing their dollar supply remained sufficient, Tuan said.  "Individuals and businesses’ dollars have started flowing into banks since the central bank constantly boosted the interbank exchange rate and strictly supervised the currency market,” said Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s Ho Chi Minh City branch.  “People acknowledged that the saving rate of 3 percent per annum on dollar deposits were low, so they opted for saving dong or switching to other asset classes,” Minh told Dau Tu Tai Chinh.  Economist Le Tham Duong recommended investors should opt for long-term deposits in dong as abundant sources of dong will force lenders to consider on reducing the interest rates in an effort to meet with the state bank’s cap on credit growth to 20 percent this year.
Stock market carries high risks

Stock investments are carrying high risks of losses as the low liquidity of the small-cap firms, experts said. They noticed that investments in stock market were also affected by regulations and the services’ quality of brokerages as investors have to make transactions through securities firms. “Share prices have always been volatile on the rumors, economic recession and the government’s policies,” said a broker from a securities company in HCMC.

Source: Sai Gon Giai Phong

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