Impact on capital mobilization
Due to the low financial background, traditional capital mobilization tools are quite monotonous, while the psychology of depositors is still "insecure" because the potential risks in the banking system are quite high, moreover, interest rates are not really attractive to depositors because they are not enough to cover the potential risks, liquidity of some commercial banks is still very weak ... so the instability of deposits is still high, hence, the possibility of activating the race to raise deposit interest rates in the banking system is still possible.
Over the past time, Vietnam has experienced 4 races to raise deposit rates, specifically:
+ The first time: In early 2008, Vietnamese commercial banks had to go through difficult times of liquidity because customers withdraw money from banks with low-interest rates and deposited at banks with high-interest rates. In just a few days, there are banks that have raised deposit rates from 15% / year to 19% / year, lending interest rates were pushed up to 21% / year in many commercial banks.
+ The second time: In early 2009, mobilizing interest rates of commercial banks increased slightly because the commercial banks forecast that the capital demand of enterprises will increase sharply in 2009 and commercial banks must prepare capital to meet the needs. Therefore, a race to raise interest rates at all commercial banks was launched with most terms, from week to 36-month term. Due to the increasing demand for capital absorption in the economy, the wave of rising interest rates to mobilize VND in commercial banks continues to cause interest rates of VND deposits to be close to the lending ceiling.
+ The third time: In early November 2010, interest rates for mobilizing capital in VND of commercial banks simultaneously increased sharply. By the middle of November 2010, the interest rates were continuously broken down, the interest rates of commercial banks inched up every day, accompanied by various forms of promotion such as gifts, bonuses, interest rate bonuses, lucky draw numbers ... to increase competitiveness and retain customers who are dealing with banks as well as attract new customers.
+ The fourth time: In the period from March to August 2011, due to intense liquidity pressure, forced commercial banks to continue to raise VND deposit interest rates, causing VND interest rates to rise at the end of the year 2010.
The above fact shows that the race to raise interest rates of capital mobilization is within the banking system, but mainly it is caused by the sentiment of customers. In principle, the mobilizing interest rates are high or low must depend on the credit rating of commercial banks: The higher the credit rating of commercial banks is, the lower the mobilizing interest rate and vice versa. However, in Vietnam at present, the credit rating has not been widely disseminated, so in recent years, basically, commercial banks still have to comply with the interest rates set by the State Bank. Therefore, depositors will tend to: shorten deposit term to hedge risks, seek commercial banks with higher deposit rates to increase deposit income, expect the SBV to always stand out for its deposits to be safe through pledges not to collapse the bank. The fierce competition in raising capital in the Vietnamese commercial banking system in recent years has adversely affected the banking system, businesses, and the economy because when raising deposit rates, the lending interest rate will also have to increase, thereby, losing the effect of interest rate leverage on the economy.
Affect lending activities of banks
For a country where internal accumulation is not high, the budget deficit is still high, while the capital demand for development investment is high to meet the ambitious economic growth needs, the credit capital is still The main source of funding for investment and consumption activities in the economy. This situation can be seen in the period before 2011 when credit growth was always approximately 30%, due to the fact that the whole economy almost "looks" on loans from credit institutions. Not only that, during periods when the international economy faced financial shocks, such as the years 2007-2009 and then the public debt crisis in the EU from May 2009 and lasted until now that there has been no end, the Vietnamese financial market is also constantly facing speculative shocks in the real estate market, gold, foreign currencies and capital for these speculative activities borrowing from credit institutions, but it also makes the bank credit hot growth. With the measures to tighten the market management of managers, especially of monetary authorities, the act of speculative profit was abolished step by step. It can be clearly seen the interaction between credit growth and market volatility over the years. It is clear that the psychology of investors on Vietnam's financial market has made the market very complicated, sometimes too hot, sometimes too cold. The erratic heat of the financial market due to the psychological impact of investors makes Vietnam's credit environment volatile and difficult to control. It can be clearly seen this situation through the bad debt situation of Vietnam's banking system: from the evolution of bad debt structure in some banks, the proportion of bad debts related to real estate is always quite high. and handling is always very difficult because the real estate market recovers so slowly because investors still lack confidence in the healthy and stable development of this market.
Investors in the foreign exchange market of Vietnam always have the psychology of holding and sometimes are influenced by the psychology of deviation due to the typical situation, leading to the majority of investors, especially institutional investors (mostly importers ...) usually want to hold foreign currency. The main reason to explain the speculation of foreign currency holdings of investors in Vietnam in recent years is the impact of the global financial crisis and economic recession. Many exporters have been holding foreign currencies for fear that the fluctuations of exchange rates will be too large, making banks not have enough foreign currency supply to regulate the economy, causing tension for the foreign exchange market. . Not only that, speculators sometimes gave false rumors to make a profit on the strong exchange rate fluctuations in the informal market - the free foreign currency trading market. The fact also shows that the psychology of foreign currency hoarding has a negative impact on the forex market has been reduced thanks to the positive effects of exchange rate adjustment. In other words, the psychology of foreign currency hoarding is a phenomenon that promotes innovations for Vietnam's monetary policy.
Besides the psychology of hoarding foreign currencies, other psychologies also affect the behavior of investors when trading foreign currencies. They are small commercial banks often based on the actions of larger banks to adjust buying and selling rates, this psychology is quite popular and can be called the psychology of acting as a guide (an expression of the psychology of tight holding called Anchoring). From the perspective of forex traders, when applying technical analysis, they are often too confident in the ability to identify trends that will continue to occur - trends of consolidation or reversal. For Vietnam's money market, many currency speculators believe that based on long-term fluctuations while investors are too confident in short-term fluctuations. In addition, the psychology of domestic investors often tends to separate between the two types of accounts of profits and losses. When the exchange rate increases and feels profitable, they will accept to sell immediately to make a profit while if the loss is the general trend they still hold in the expectation that the exchange rate will rise again.
Vietnam stock market is considered as a market of small investors acting in accordance with the psychology of the crowd, in which, domestic investors only know to exaggerate information, lack of in-depth understanding of information published, or consulted by domestic and foreign experts. Therefore, they enter the market with a high level of risk and only see a short-term vision. In contrast, the foreign investors have both the professional and the experience they realize the inevitable fluctuations of the market until they realize the dangerous time, the warming of the market and quietly selling will not cause any signal. brand run on the market. Meanwhile, foreign investors always keep an independent move and separate from the psychology of the crowd. In times when the market dropped sharply like in the period of 2009-2010 and there was almost no sign of a reversal, the gloomy atmosphere showed clearly in domestic investors, foreign investors still accounted for a fairly high trading volume. high (about 20% of the whole market). They hold stocks at different prices, buying - selling in a rolling fashion, forming a move that can lead the market. Meanwhile, domestic investors are less sensitive to market information. On the other hand, this information is currently considered to be incomplete, and many rumors affect the psychology of investors, causing confusion and following the crowd as observed in some periods.
The buying and selling of foreign investors have more or less affected the psychology of domestic investors and this trend is getting stronger in recent years. Domestic investors began to focus on the buying and selling activities of foreign investors and following that trend. While the capital of foreign investors is on the rise in the Vietnam market and it will increasingly dominate the stock market through capital investment channels. This is also a form of running after the crowd of professional investors of domestic investors. In addition, foreign investors are divided into 2 groups: one focused on medium and long-term investment strategies based on a clear portfolio, and the other focused on short-term investments. One thing to worry about is the increase in the number of the second group and play a leading role in the Vietnamese market, participating in market manipulation and price manipulation in each time of the market and they are the holders. Large quantities of stocks at different prices. By rolling sales at each price, they can lead the market and disturb the market. By the time domestic investors can know the selling volume has caused stock prices to fall, it is late and falls into a state of selling off at cheap prices to the market. This shows that domestic investors are still lack of sensitivity, reaction, and information processing and are always placed in a passive state and easily fall into the dominant trap of foreign investors.
The majority of professional investment institutions are those established by foreigners in Vietnam. The number and size of these organizations are small, but growing rapidly and they operate with a certain degree of optimism. Therefore, if domestic investors lacked a more alert view of the market, they would fantasize according to the information given and form a movement mentality, the market has been continuously pushed by successive waves. All the above issues show that it is necessary to have measures to limit the dependence on foreign investors; otherwise, the stock market will be a gamble with the main factors being foreign investors. The unpredictable and complicated fluctuations of our country's stock market in recent years are partly due to the influence of this market, but on the other hand, the fact is due to the link between the stock market and the money market. affecting the effectiveness of the monetary policy.
Alice Hoang - Vietnam Credit