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Foreign investors remain optimistic when domestic stock prices plummet

Foreign investors remain optimistic when domestic stock prices plummet

Thursday 30, 07 2020
In the face of negative news about the Covid-19 pandemic, Chairman of Dragon Capital was still optimistic about the stock market and the internal strength of Vietnam's economy.

Information about the occurrence of Covid-19 cases in the community in Da Nang and Quang Ngai caused concerns for domestic investors, the rising selling pressure caused the stock market to plummet. Particularly in the session on 27/7, the VN-Index plunged 5.3%, losing 44 points, retreating to the level of 785 points.

However, Mr. Dominic Scriven - chairman of Dragon Capital, said that "the market's momentum does not last long" and is optimistic about the rapid resilience of Vietnam's stock market.

Mr. Dominic Scriven is one of the first foreign investors in Vietnam's stock market. His Dragon Capital Fund has been with the Vietnamese market for 26 years, 6 years before the stock market went into operation in late July 2000.

Fast recovery

"The disease affects a lot of industries. However, there are still some industries that are not affected and even benefit. Investors need to be responsible and have an obligation to analyze. Before analysis, it is advisable to wait. Further information about this new outbreak, "Mr. Scriven commented.

"In particular about Dragon Capital, we did nothing today (trading on 27/7)", the Chairman of Dragon Capital revealed.

According to Scriven, under the impact of the epidemic, central banks, and financial institutions around the world have taken drastic measures such as loosening monetary and increasing liquidity.

Foreign investors remain optimistic when domestic stock prices plummet

"The surprising thing is that most of the global stock market is recovering at a rapid pace. There are many factors leading to this trend. One of them is because a part of investors only buy when prices fall." So this is an opportunity for them, "Mr. Scriven explained.

Ending the last trading session of quarter II / 2020, Dow Jones industrial average index increased by 17.8%. This is the largest quarterly average increase since the first quarter of 1987. Meanwhile, the S&P 500 also had the strongest quarterly increase since the fourth quarter of 1998. The Nasdaq Composite increased by 30.6%, the largest since 1999.

The Covid-19 epidemic promotes a number of occupations, while many others face a major change. "When not moving internationally, many people turn to travel domestically. Some areas such as health and e-commerce are also being promoted by the Covid-19 pandemic. In addition, transportation and catering services are subject to change, "said Scriven.

Gold and securities increased

Gold prices are often driven by the plunge of the stock market. The reason is that investors want to find safe-haven assets, including gold. However, the crisis caused by the Covid-19 epidemic saw an increase in the stock, bond, gold, and real estate markets in some places.

Explaining this phenomenon, Mr. Scriven said that during the crisis 10 years ago, the financial and banking systems of many countries in the world lost their ability to operate. "Or rather, investors are worried that the financial system will collapse. This makes them pour money into safer places, pushing up the price of gold," Dragon Capital chairman explained.

However, in this crisis, according to him, central banks around the world have ensured that the financial system will work properly. The fear factor no longer dominates investors.

"This time, fear is no longer the cause. I think the cause is mainly about money," Mr. Scriven said. Large support packages from a range of governments around the world can create inflation and affect gold prices. "When the global money supply increases sharply, it is difficult to escape the possibility of inflation in the coming years," he added.

Gold and securities increased

Do not put eggs in the same basket

With more than 20 years of experience working with Vietnam's stock market, the chairman of the investment fund said that the market's momentum did not last long.

According to him, although the new outbreak created a shock, we are "able to predict the impact of the disease on the economy and take measures to help the economy recover quickly".

However, according to Mr. Dominic Scriven, this is still a great lesson for investors in risk management, including financial risks and non-financial risks.

"The key skill in stock investment is to diversify your portfolio. Never put all your eggs in one basket," said Scriven.

"From the beginning until now, Dragon Capital has always pursued the policy of diversification. Thus, in the face of unexpected challenges such as epidemics, we are still under the common influence but not affected too much," he emphasized.

In addition, according to Mr. Scriven, the foreign press has recently praised Vietnam for dealing with pandemics and the intrinsic strength of the economy. "This event has changed the view of Vietnam for many foreign investors. This is a market worth the capital," he said.

According to him, the Vietnam stock market still has many shortcomings, problems, and pressing issues that need to be removed and perfected.

"However, there is no need to be too worried about this because these are issues that any stock market needs to face. After more than 20 years of living with Vietnamese securities, having, losing, having sad. , having fun, for me, it was an interesting journey, "he shared.

Credit in Ho Chi Minh city is expected to increase at the end of July 2020

Source: Vietnam Finance


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