According to Economist Vo Tri Thanh, investors will still concentrate on 3 large markets which he calls “The 3 risky games” in 2011.
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| Many experts are forecasting low ecnonomic growth rate in 2011. |
Dr. Thanh, Deputy Director General of the Central Institute of Economic Management, (CIEM), quotes some assessments from major economic organisations including the IMF, World Bank, Citi Group and Paribas on the world economic outlook, which all say 2011 will see a significant fall in the world’s economic growth compared to the 2010 rate. By 2012, the economies will have to work hard to match 2010’s rate.
Dr. Thanh says that while the USA and EU are still in dispute on public expenditure and many countries including China and the USA all want to apply monetary policies to promote export; investors will still concentrate on 3 large markets which he calls “The 3 risky games” which are: major commodities, monetary and stock.
“With their loose monetary policy, the U.S. expects the investment to flow to business and production,” Thanh said. “However, due to the low economic growth, investors will concentrate on such major commodities as food, oil, gas, steel, etc. This will result in hikes on prices of these products which impact macro policies. Because, major commodities except for gold cannot grow fast but will fluctuate over big ranges so investing in these markets will be very risky.”
He said monetary areas will be the second investment channel and the third will be stock and real estate. Stork markets in China and Vietnam are losing points compared to the beginning of this year. This situation is resulted from macro issues in Vietnam while in China it is caused by monetary tightening policies.
Many countries are tightening their money supply at the same time controlling capital in order to curb inflation which occurs when they have to use their money to buy foreign capital investment.
In that context, they will encourage investment in other countries and Vietnam may be a good destination for foreign capitals. Dr. Thanh says that these capitals will not likely flow into Vietnamese stock markets because the local market volume is still very low and poses risks and difficulties due to the current loose monetary policies.
“The growth rate of Vietnam always depends on the monetary supply which is a risk for its economic stability. Besides, the country’s policies are not attractive to foreign investors. We are in a market economy, however, we are concentrating too much on measures for controlling prices of single goods rather than on monetary and exchange rate policies which are the two most important steps for price stabilization, Thanh said.
Over the last 6 months, foreign capital flow to real estate markets has increased again through direct investment.