2024 expert advice: understand investment channels better, make money calmly

Investors can stay proactive and calm, limit herd behavior and adopt appropriate investment and retracement strategies in 2024 with improved knowledge and understanding of investment channels, says Can Van Luc, chief economist of BIDV bank and director of BIDV Research & Training Institute.

In 2023, Vietnam's economy faced many difficulties and managed a GDP growth rate of 5.05%, lower than the 6.5% target and the 8.12% recorded in 2022. Inflation expanded 3.25% - a slight increase compared to 3.15% in 2022.

Given the difficult economic context and inflation kept under control, the State Bank of Vietnam made four policy interest rate cuts, equivalent to a decrease of 0.5-2 percentage points per year, to reduce deposit and lending interest rates, increasing businesses and people’s access to capital. However, amidst slow recovery of the stock and real estate markets, deposits and gold investment channels attracted great interest.

In 2024, it is possible to have a clear shift between investment channels with more attention to the stock market, real estate, private investment and startups.

Bank deposits

At this time, deposit interest rates are forecast to have hit the bottom. With credit in 2024 expected to grow faster (about 15% set by the State Bank of Vietnam), deposit interest rates will stay flat or increase slightly by about 0.1-0.5 percentage points this year.

While the deposit scale is at a high level and high-rate and long-term deposits (12 months or more) at credit institutions are starting to mature from the end of 2023 and the beginning of the year 2024, cash flow may make a certain shift to channels with higher returns and acceptable levels of risk.

Real estate

The real estate market is expected to recover partially (depending on the segment) from the second half of 2024, restrained by weak supply and demand, increasing bad debts and slow settlement of legal problems.

Delays in planning, policy enforcement and social housing development; people still waiting for real estate prices to decrease; and limited income are factors that would add pressure on the market.

Industrial property could continue to be a bright spot while residential real estate, including social housing, is likely to bounce back starting mid-2024.

Resort, retail and office real estate segments are likely to recover more slowly because they depended on strong recovery of international tourism and changes in sales methods (e-commerce instead of direct buying and selling) or a more flexible working mode.

However, along with the economic recovery, legal problems and law violations on the stock and real estate markets have been basically fixed; and guiding documents issued for the recently adopted Land Law 2024, the amended Housing Law 2023 and the amended Law on Real Estate Business 2023 will make issues clearer.

Land and property prices are getting closer to real market prices, interest rates are low, and supply cannot increase rapidly. These factors will make it difficult for real estate prices to fall further and may even slightly increase in some segments by the end of 2024. Therefore, investors can take advantage of the current low base to buy properties and then sell them for profit in the second half or later.

Stock market

In 2024, Vietnam's stock market will be affected by both positive and negative factors. According to Bloomberg’s January forecast, the VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), would range from 822.2 points (P/E 11x, down about 25%) to 1,318 points (P/E 17.5x, up about 19%). The scenario of 15-20% growth is feasible.

At the same time, the corporate bond market is expected to continue improving. Real estate supply looked set to begin recovery in the second half of 2024, with businesses tending to expand their business operations, which will push up capital needs. The effects of the government's policies to remove market difficulties, including the scheduled application of stricter conditions for the corporate bond market when amending Decree 62/2022, will continue to have a positive impact.

With deposit interest rates having dropped to low levels, individual investors are gradually regaining their confidence and accepting more risks, so they may be more interested in investment channels with higher levels of risk and higher returns like corporate bonds.

Gold market

The intervention of the State Bank of Vietnam with amendments to Decree 24/2012 in January 2024 will help reduce the gap between domestic and international gold prices, making the gold market more stable. With reduced economic risks, gold will gradually ease its role as a safe haven, so it is expected that returns from gold investment activities will level off, equivalent to 2023, at 5-7%.

Investment strategy recommendations

Firstly, investors need to know who they are and what their "risk appetite" is to have suitable investment strategies and channels.

Secondly, with investment strategy, the important thing is to keep diversifying investment channels or portfolios, which means pouring money into different asset types to minimize risks. It is also advisable to consult experts or entrust investments to professional brokerage, investment, business and management organizations.

Thirdly, investors should use financial leverage moderately. Leverage can help increase profits and profitability, but this also comes with high risks if not managed properly, especially when interest rates are high and liquidity is poor. Choosing a level of leverage appropriate to one’s financial situation, including ability to meet loan conditions, is important in avoiding unwanted risks.

Finally, improving knowledge and understanding of investment channels is an important factor, helping investors stay proactive and calm, limit herd behavior and adopt appropriate investment and retracement strategies.