Analysts favor deposits, gold in 2023 investment outlook

Deposit interest rates to remain high

Banks are offering a deposit interest rate of 7.5%-10.5% annually and the rate is likely to stay at this high level during the year.

Analysts of brokerage VNDirect said that the limited liquidity situation caused by a crisis of faith in the bond market in 2022 will likely continue this year and that banks are still “thirsty” for capital to ensure capital criteria are met and to provide loans to borrowers.

Interest rates are likely to decline in the second half of the year if currency exchange pressure declines.

Analysts of Vietcombank Securities said that interest rates still have room to rise this year as many central banks are still considering hiking their policy rates at least in the first six months of the year.

Gold prices to rise modestly

Nguyen The Hung, an analyst with the Vietnam Gold Traders Association, said that as the U.S. Federal Reserve has raised its rates six times since March last year, the dollar has gained and some investors have sold their gold to invest in another asset.

Vietnam gold prices usually go sideways in the third quarter and surge in the remaining months, he added.

Global gold rates have reached $1,950 per ounce and are forecast to reach $2,000.

But some investors might have to sell their gold early to resolve the cash shortage on the monetary market.

“Gold might increase but it won’t be as big or as sudden in as in 2021 and 2022,” Hung said.

Dollar to be stable

The U.S. dollar is unlikely to record another climb against the Vietnamese dong this year as the U.S. Fed is set to put an end on its rate hike by the middle of the year.

Standard Chartered Bank has forecast that the recovery of the Chinese yuan will boost the Vietnamese dong. It forecast that the USD/VND exchange rate will be at VND23,200 by the end of March and inch up to VND23,500 by mid-year.

Lender UOB forecast that the USD/VND exchange rate will climb to VND25,800 by the end of the year as the dollar is set to be strengthened as Western economies are predicted to experience recessions.

VN-Index to rise modestly

Analysts seem to be conservative about Vietnam’s stock market potential this year with the most optimistic forecast from VNDirect putting it at 1,200-1,300 points, up 13%-22% from now.

Rong Viet Securities said in a report that the economy and the stock market will likely face headwinds at least in the first half of the year due to global impacts such as the Fed’s rate hikes, a global recession and domestic businesses’ ability to redeem a large amount of bonds that are set to mature in the second quarter.

VNDirect analysts expect that listed companies will see their combined profits rise by 14% from last year.

Property prices set to fall

Tran Khanh Quang, CEO of Viet An Hoa property developer, said that even in the most optimistic scenario, prices will only start to rise in the third quarter.

Central business districts will likely see increases of 5-7% and outer districts 10-12% year-on-year.

In a less optimistic scenario, which Quang believes is more likely, businesses might have to spend the first six months resolving their own issues, such as high inventories and low cash flows.

If loan interest rates are stable at 10%-12% annually in the third quarter, transactions could resume in the market, he added.

Property prices, generally, are set to decline by 5%-7% year-on-year in Long An, Binh Duong and Dong Nai, and 10%-15% in Ba Ria-Vung Tau.

Troy Griffiths of Savills Vietnam said that Vietnam will not be left out of a global slowdown in economic activities, and that problems in the bond market and related investigations could have a negative impact.

Nguyen Loc Hanh, CEO of developer Ngoc Chau A, said that companies need to be prepared to see liquidity remain low for the first six months and that it is likely that companies will have to suffer losses.

Cryptocurrency: regaining trust?

Le Sy Nguyen, the Southeast Asia manager of cryptocurrency exchange platform Bybit, said that users have gained much knowledge and experience after a year of difficulties. Investors are looking for more information on the transparency of projects and platforms now.

As investors are expecting a recovery, many new project developers might take advantage of this sentiment to seek to raise money, and so investors need to be prudent in deciding which new crypto to buy.

Mark Mobius, a co-founder of investment fund Mobius Capital Partners, said that Bitcoin will likely drop to $10,000 and investing in it would be too risky.

However, Mark Connors, head of research for digital asset manager 3iQ, sees a crypto rebound by the third quarter of 2023 and financial services firms and others playing a more proactive role in the development of regulation.