Though the economy appears to be recovering, investors are becoming more cautious as they face further risks from the financial market.
For example, on July 1 only 10 million shares were traded on the Hanoi Stock Exchange. In HCM City the trade of shares was down 70% from previous months.
Investors appear to be more wary of making risky investments, even though the government has loosened monetary policies and lowered interest rates.
Despite a number of bailout packages, many firms still are dealing with an overload of inventory and are short on capital. The increases in fuel and electricity costs has also hit these businesses hard.
Many investors have said that they worry that the long-term trend of the markets points to value reduction.
The gold prices have also decreased from VND37-40 million (USD1,700-1,900) to VND34-35 million per tael. The domestic price remains higher than world price posing another risk to investors. A number of experts have predicted that domestic gold prices will decrease in the future.
The SBV's move to lower interest rates has also made other forms of investment less attractive, from savings accounts to real estate.
According to a survey by HSBC, the purchasing manager index in June declined to 46.4, lower than average. This means domestic demand has decreased. This could, in turn, result in staff cuts. HSBC warned that a decrease in the employment rate would likely lead to decreased demand.
Initially, the real estate rescue packages and the establishment of bad-debt management company helped to boost the stock market. However, many companies are having a difficult time in the current economic environment.
Investors appear to be waiting for more concrete policies and results from the bad debt management company.
