Over the past two years, “cheap money” has been on heated debate throughout the international financial market due to strong support packages from governments around the world. The consequence of this massive money injection is an existing asset bubble when asset prices are continuously pushed up and the risk of bubbles bursting in many countries.
In Vietnam, with measures to loosen monetary policy, support economic recovery and accelerate public investment, developments in the asset market are not out of the general trend of the world. Cash flow began to focus more on financial investment channels such as stocks, bonds or real estate.
Besides, in 2020 and 2021, the continuous reduction of deposit interest rates was also pushing the flow of savings out of banks. Credit flows do not go directly to production and business activities due to the complicated situation of the epidemic, but mainly into investment channels.
Asset markets have witnessed significant growth as they are a haven for investors' idle cash flows. In particular, securities become one of the investment channels that attract the most cash. The number of securities accounts continuously set a record in 2021. In the real estate market, housing prices were also constantly increasing to a new level.
Commenting on the current asset bubble risk, economist Dr. Pham The Anh said that these concerns are completely grounded.
In the past two years, the loosening monetary policy in many countries has taken place very strongly, causing high inflation. Many countries have been forced to raise interest rates to curb inflation and the risk of asset bubbles.
In Vietnam, policies are lagging behind the rest of the world. It was not until recently that the Government and the National Assembly were talking about strong economic stimulus packages. Of course, before that, the Government had also implemented economic support packages but on a moderate scale.
The problem is that when the stimulus packages and money injections into the economy are implemented, it will lead to the risk of high inflation. According to Mr. The Anh, recently, Vietnam's CPI has been maintained at a low level, but the CPI does not reflect the current situation of prices in the market.
In fact, monetary easing is causing asset prices to increase sharply. Due to the facts that capital and resources in the economy are not poured into production and the interest rates are low, people have resorted to the asset market.
In particular, in 2022, Vietnam's interest rates are likely to continue to decrease or stay stable. With the current Government decisions, it will be difficult to raise interest rates in 2022 to serve the recovery of the economy.
Although the economy is facing the risk of inflation and rising asset bubbles, according to Mr. Pham The Anh, the possibility of bubble bursting is unlikely.
Vietnam is lacking investment and assets hoarding channels. Therefore, the rich and those with money all pour capital into real estate. Real estate is only for a very small percentage of the population who accept to keep that property within 3-5 years. When there is no need to use large capital, they will not withdraw money from any real estate.
On the other hand, with population growth and high urbanization rate, investors' demand for real estate is now huge. Great demand will push real estate prices higher.
Similarly, for the stock market, Mr. The Anh said that, after the hot rally, recently, the stock market is adjusting sharply. However, listed companies do not represent all businesses in the economy. Vietnam has about 700,000 enterprises, but the number of enterprises listed on the stock exchange is only 1,000.
Moreover, the growth of Vietnam's stock market is not too hot compared to other markets in the world. Therefore, the risk of a market crash is very unlikely.
In 2022, if bank interest rates continue to be kept low, investment channels such as securities and real estate will continue to be attractive, especially in the context that the economy has not really recovered.
Sharing the same opinion, Dr. Nguyen Duc Thanh, director of the Vietnam Center for Economic and Strategic Research, also said that in the context of the economy not really recovering, real estate and securities are still the most attractive investment channels.
According to Mr. Thanh, Vietnam's economic growth in 2022 will face many difficulties and uncertainties, completely dependent on the control of the pandemic and the Government's regulations.
In 2021, the economy still maintained a positive growth rate. In 2022, Vietnam needs to make more efforts in reforming institutions, business environment, and upgrading the quality of the economy, especially the private sector, to maintain growth.
Compiled by VietnamCredit