Vietnam - Experts share tips on investments in turbulent times

Investors should move cautiously to retain the value of their investments so that they can make money during times of rising uncertainty this year, said experts at a recent investment conference.

It’s still a good time to make an extra buck, but investors should use their brains proactively, said Dr Alan Phan at the Super Investor Day 2012.

“Popular investment channels, including gold, stocks, forex, material/commodity contracts and real estate could still be profitable this year.”

2012 will be a good time to see more deals via mergers and acquisitions (M&A), and franchising. Investors should also consider pouring their money into Vietnam’s advantage edges, including agriculture and information technology (IT), he said.

“In any economic ‘boom and bust’ cycle, many assets will change hands, and there are also opportunities available to those who are not affluent.”

“New firms with new growing models will usually emerge in the aftermath of any crisis.”

“Those who want to join the game may have to master 5 factors, including affection for work, competitive edge, knowledge, health, and the patience to care for their own businesses.”

“The stock market will go up with government interventions, as the government has shown signs of making a move, but in the long run the real value of a public firm is what really matters.”

“It is more important to monitor the market so that it can grow healthily and become more transparent, which, in turn, helps recover investors’ confidence and thus, boosts liquidity.”

“Stock investors should consider 3 factors: investment for long-term profits is better than short-term speculation with lower risks, cost cutting by limiting margin trading, and mapping out a detailed written overall investment plan,” said American financier David Jensen.

“A market for material contracts is more promising since it is still immature here in Vietnam,” said Alan.

“Gold, to me, is a safe-haven asset rather than an investment channel, especially in turbulent times,” he said.

Glittering gold

“Big international financial institutions, including Morgan Stanley and HSBC, have predicted the gold price to exceed $2,000 an ounce in 2012, and even hover around $2,200 an ounce in the near future” said Le Hung Dung, chairman of Saigon Jewelry Co (SJC) – Vietnam’s biggest gold trader.

“In my opinion, the price may be about $2,000-$2,100 in 2012-2014,” said Dung, also chairman of Eximbank’s board of directors.

“The precious metal has skyrocketed 54 times in the last 40 years following the cash pumping of worldwide governments.”

“Will the 3rd round of quantitative easing be realized by the US Federal Reserve (FED) this year? We don’t know yet.”

“But with recent announcement of FED chairman Ben Bernanke on maintaining zero-like interest rate till 2014, the gold price has recovered the $1,700 threshold.”

“About 24,080 tons of gold are in reserve by the world 10 largest economies, and world’s biggest gold funds are still buying more gold.”

“China, owing world’s biggest foreign reserve of over $3.18 trillion, is trying to diversify its reserve in gold by buying more to add to its current publicized 1,054 tons of gold, 1.5-1.7 percent of the world’s gold reserve.”

“So, if China raises its gold reserve to 3-4 percent as a tool to fight inflation caused by the US’s quantitative easing, with current limited supply worldwide, the gold price will be under great pressure and may surge strongly this year.”

"In addition, the European Central Bank is under the effect of the huge debt crisis, through which their assets will also devalue. So, as the euro depreciates, gold will rise in value," Dung said.

“As a result, long-term inventors can consider buying gold as a value-backed asset.”

“But those who want to join gold margin trading, must think twice.”

“Even we, the professionals, have failed so many times while playing the game.”

Regarding the appropriate price frame for the local market, Dung said there is no such thing, adding that buying gold at a given price range depends on personal decision-making.

“As of December 31, 2011, SJC has supplied the local market with over 19.285 million taels of gold, or around 723 tons, since 1989.”

“So, if the gold mobilization scheme of the central bank is to be realized, around $27 billion worth of gold, estimated to be around 300-500 tons, will be usable for the economy.”

“The central bank can use the gold to transfer into dollars and then into Vietnamese dong for lending at 9-10 percent a year, which will be a big boost for the whole economy."

However, overseas Vietnamese economist Pham Do Chi disagreed with the scheme, stating “it is a real potential risk which could become a national financial suicide program”.

Chi, who used to be the manager of a $1 billion fund of the International Monetary Fund, said no countries in the world dares to conduct such a scheme.

“If the prices of gold surges as strongly as predicted, how can the national banking system repay the gold bullion to depositors?”

“In the coming turbulent times, individual investors should consider dividing their investments into gold, dollars and Vietnamese dong in 1:1:1 proportion.”

“Then we can restructure the investment to maintain the ratio by depositing more dong into banks or buying/selling more gold and dollars,” he added.

THOAI TRAN

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