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Investors are "bored" with stocks, and bank deposits set records; what is happening?

Besides the lack of new money entering the market, the VN-Index losing the important milestone of 1,100 points also significantly affected investor psychology, making trading gloomy.

According to new data released by the State Bank, the number of people's deposits at credit institutions increased by 15,935 billion VND in September, reaching a record level of more than 6,449 million billion VND. The number is quite surprising as deposit interest rates at many banks have fallen to unprecedented lows after continuously decreasing in recent times.

Also read: Deposit interest rates have passed their heyday » Vietnam News - Latest Updates and World Insights |

At Vietcombank, the interest rate for 12 months or more is 5%/year, while terms of 6 and 9 months are 3.9%/year. The 3-month term is only 2.9%/year. At banks like BIDV, VietinBank and Agribank, deposit interest rates are higher, such as terms over 12 months at 5.3%/year. Terms from 6 to less than 12 months have a deposit interest rate of 4.3%/year... Private banks' deposit interest rates also dropped to record levels, commonly around 5.3 - 5.7%/year long-term from 12 months or more. As for terms from 6 months to less than 12 months, it is 5%/year.

Residential deposits at credit institutions (million billion VND)

In that context, the stock market has been trading gloomily with a sharp decline in liquidity since the end of September. On the last session of November 27, the matched order value on HoSE fell below 10,000 billion VND, the lowest in nearly a month since late October. This shows that investors with idle money still need to be more excited about stocks. The shift from deposit channels to securities in the context of low-interest rates is generally different than expected.

According to experts, the world economy still has complicated developments, negatively affecting the domestic economy. Investment channels in stocks, real estate, and gold have many risks. Therefore, to secure their assets, people deposit money in banks. Deposits are considered a safe and profitable channel to keep money even though deposit interest rates are continuously decreasing.

Also read: Forecast when Vietnam's economy bottoms out » Vietnam News - Latest Updates and World Insights |


Volume turnover on HoSE is at its lowest since the end of October (billion VND)

Meanwhile, the fact that VN-Index lost the important milestone of 1,100 points has significantly affected the psychology of stock investors. The money in the market is inclined to "immobility" when many comments say that the VN-Index needs to create a 2nd bottom before confirming a new uptrend. This is also the time when the market falls into an information valley. Investors are willing to wait for disbursement opportunities at better price areas.

Besides, the need to use leverage is not great when the market has yet to form a trend. The margin balance is also estimated to have decreased by about 10-15% compared to the level set at the end of September after the mortgage release in October. The negligible pressure to sell at all costs helps investors avoid panic during corrections.

In addition, stock groups that often "consume" liquidity are entangled in their own stories. The banking group is caught between low credit growth and rapidly increasing bad debt. Real estate stocks - the group that shouldered liquidity in the third quarter - also cooled down significantly after the peak bond maturity season passed. The stock group is the brightest, expecting KRX to operate at the end of the year, but the valuation could be more attractive...

Low liquidity may be a temporary factor. The market still has a few stories worth waiting for soon, such as the new KRX system officially "go-live", the profit picture for the fourth quarter and the whole year 2023, the Fed's important meeting in December and messages for the coming year,...

Assessing the prospects for Vietnamese stocks in the coming time, Dragon Capital believes that the market may have passed the bottom, but the recovery prospect still needs to be clarified. VN-Index's P/B has returned to about 1.5 times, an unprecedented low since the Covid period. With the State Bank still maintaining its loose monetary policy, the market is in the oversold zone. However, the local currency has decreased by 4.4% since June this year, causing after-tax profits to be affected by provisions for exchange rate losses in some large-cap stocks with debt in USD.

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