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Will gold money find its way into the stock market?   2010-01-13 - VietNamNet/TP

Securities investors hope money will flow into the stock markets following the closure of the gold exchanges but many believe it won’t mean a “golden” windfall for the markets.

Securities investors hope money will flow into the stock market

“I think the volume of money flowing to the stock market from gold exchanges will not be big,” said Dr Le Dat Chi from the HCM City Economics University.

Chi said the money investors use to trade on gold exchanges is just “virtual cash”. If an investor makes a one billion dong investment deal, this does not mean that he has one billion dong. In fact, he only has 50-70 million dong, while he borrows the remaining sum from different sources. Currently, gold exchanges only ask for small security cash of 5-7 percent of the transactions’ value.

Tran Thanh Hai, general director of VGB, a gold investment and trade company, admitted that many investors, who last year left the stock market for gold exchanges, are now returning to the stock market. However, he does not think there would be a sharp increase in cash flow between the gold and stock markets.

Meanwhile, other analysts say that the stock market would not attract investors who want to make big deals and make large profits. Therefore, gold investors would choose other investment channels than the stock market.

Luong Tri Thin, general director of Dat Xanh Real Estate Corporation, has confirmed that many clients, who purchase his Him Lam Riverside apartments, are gold investors.

Vu Hai Anh, the owner of Kim Hai Gold Shop in District 3 in HCM City said that once ACB Gold Trading Floor shuts down, she would move to making investments on the steel trading floor or put money into real estate projects. Anh said that she would have only a small capital sum for stock investments.

In principle, there is another source of capital for the stock market: investment funds. Nguyen The Lu, chairman of SAM Fund Management Company, said that foreign investment funds are eyeing Vietnam’s stock market, but they are still awaiting opportunities. He said that his fund and many other funds would only raise new funds after Tet and consider investments then.

Investors think big

Meanwhile, individual investors appear to believe that the stock market is on the up.

Tran Anh Ngoc, an investor at ABS Securities Company, said the cash flow into the stock market these days is continuing to increase while, gold exchanges are shutting down and the real estate market remains gloomy.

This explained why the volume of transferred stocks unexpectedly increased sharply on both the Hanoi and HCM City exchanges late last week

The fact that the State Bank of Vietnam has pumped 15 trillion dong to support commercial banks’ liquidity has also been cited as a positive factor for the stock market.

Individual investors believe that stocks would still be an attractive investment channel, at least until Tet.



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