Financial expert Đinh Trọng Thịnh. Photo vietnamhoinhap.vn

Việt Nam’s economy is expected to recover and grow more strongly in 2022, and real estate and securities are forecast to remain magnets for capital flows. However, as some economic uncertainties are still ahead, including inflationary tendencies and contractionary monetary policies, many investors are not quite sure which investment channels to put their money in this year. Financial expert Đinh Trọng Thịnh talks to Vietnam News Agency about sound investment opportunities in 2022.

What are the impacts of the pandemic on investment channels in 2021?

As the State Bank of Vietnam encouraged and requested commercial banks to cut costs and reduce lending rates, deposit rates were adjusted down accordingly. Consequently, saving was no longer an attractive channel to investors.

Domestic gold prices rose in line with world prices but fell at a slower pace. Additionally, the gap between the two prices was huge. At some point, domestic prices for one lượng (unit of mass) were up to VNĐ12 millon (US$526) away from the world prices. That means gold was a risky channel to invest in.   

Việt Nam’s economy grew by 2.91 per cent in 2020 amid the pandemic, much higher than the average shrinkage of 4 per cent of the world economy. As a result, the Vietnamese securities market climbed steadily in 2021. Notably, it began the year with around 600 points but ended up with more than 1,300 points at year-end.

For this reason, a portion of savings was withdrawn to invest in securities. Millions of new investors emerged and jumped into the securities market. In 2021, Việt Nam saw its market go up by 36 per cent and was among 10 economies with the fastest-growing securities markets.

We can’t deny that there still exists unannounced sales and prices manipulation that led to market fluctuations in late 2021 and early 2022, but it is safe to say that securities were a relatively good investment channel last year.

Real estate prices rose around 4-7 per cent on average in 2021. It was an investment magnet for various sources of funds including savings and profits derived from the securities market.  

However, some events in late 2021, notably the land auction scandal, has resulted in volatile prices and had repercussions for the whole market. To some extent, the market seemed to come to a halt and even experience liquidity freezes in the last days of 2021 and early 2022.

What do you think about gold, US dollar and savings in 2022?

Although we expect the banking system to keep lending rates low through cost-cutting and governmental support, some economists believe that commercial banks are likely to raise deposit rates to attract more savings. As a result, savings will be appealing to investors and depositors this year.

As inflation rates were high in 2021, many countries will apply tight monetary policies in 2022 to curb inflation. The slow growth of the world economy, coupled with contractionary monetary policies, will lead to currency appreciation in major economies. Accordingly, gold prices will fall at some point.

However, several experts believe that gold prices will continue to rise to $1,900 and even $2,000/ounce if greater shocks emerge to the world economy, including higher oil prices and new variants of COVID-19.   

Personally, savings, US dollars and gold are likely to be popular but not very attractive channels to investors in 2022.

What do you think about the real estate channel in 2022?

Admittedly, real estate stock prices and activities in the real estate market are fluctuating greatly and probably going downwards. However, the outlook for growth is still bright thanks to the recovery of Việt Nam’s economy and foreign capital inflows. Notably, over $31.2 billion of foreign direct investment poured into the country in just 2021 amid the pandemic.

It is also worth noting that public investments in the economy are massive, and so are the investments from domestic firms. Accordingly, the real estate channel is expected to be appealing to investors.

Among real estate segments, industrial real estate will be the most investment-attractive in 2022, and followed by tourism and resort real estate.

We haven’t undertaken economic activities to develop tourism for a long time due to the pandemic. Thanks to the recent reopening of tourism and transport services, tourism and resort real estate is expected to soon return to be a lucrative segment of the market. Likewise, mid-priced housing and apartments will become a riding-high segment due to mounting demand.

In short, the real estate market is expected to pick up steam in 2022.    

What do you think about the securities market in 2022?

Many optimistic performance indicators in Q4/2021 allow us to hope that the economy will recover and grow strongly in 2022. I forecast the growth rate will stay at around 7-7.5 per cent.

Notably, the recently-launched recovery programmes and support packages from the Government and the National Assembly are expected to be the driving forces behind the rejuvenation of the economy and the securities market.

It is undoubted that unannounced sales and prices manipulation in late 2021 has been causing price slumps in several securities, but in general, the market will continue to take off thanks to the economic recovery.       

Among firms that come out well in 2022, stocks of processing and manufacturing firms, which are the engine of economic growth, and those of import-export firms will be the most attractive in the market, and real estate stocks come next.

The Vietnamese securities market grew steadily in 2020 and 2021. This year, the market will continue an upward trend but with some periods of corrections. I believe such corrections would give the market chances to consolidate its sustainable growth and correct itself in line with the economy.    

Is there any other channel that is considered lucrative in 2022?

In my opinion, investments in start-ups and digital economy are also expected to be fruitful in 2022 because Việt Nam has been putting efforts into digital government, digital economy and digital society. The downside is that these sectors normally require large investments and are very selective about investors and capital flows. Investors interested in official channels could consider the two channels while making investment decisions. —VNS