Lower interest rate hoped to encourage spending

Saturday, May 18, 2013 11:47

HA NOI (VNS)— The lower deposit interest rate is expected to boost investments in the stock market, but the fact that billions of dong are sitting idly in investors' accounts tells a different story.

First-quarter business reports of 95 securities companies showed that investors' accounts contained more than VND7 trillion (US$333.3 million), up VND450 billion ($21.4 million) compared to the beginning of the year, according to online newspaper Tri Thuc Tre.

Saigon Securities Inc (SSI) topped other brokerages in terms of "inactive" money with over VND820 billion ($39 million) lying unused in investors' accounts.

HCM Securities and Kim Long Securities followed with around VND600 billion ($28.6 million) each.

At smaller companies (FPT Securities, VPBank Securities, Military Bank Securities, Bao Viet Securities and Viet Dragon Securities), the amount of idle money ranged from VND200-400 billion ($9.5-19.1 million).

In contrast, liquidity on both national stock exchanges tended to decrease. The daily trading value on the HCM City Stock Exchange fell from VND1.7 trillion ($81 million) in January to around VND900 billion ($42.9 million) in April.

The figure on the Ha Noi Stock Exchange also declined, falling from more than VND400 billion ($19 million) in January to below VND300 billion ($14 million) in April.

Liquidity in May rose slightly over the previous months but remained modest on both exchanges.

According to Nguyen Bich Ngoc, a Ha Noi-based investor, the current deposit interest rates were no longer attractive to investors, who wanted to keep money available in securities accounts to make quick investments when opportunities arose.

Interest rates for terms less than 12 months at commercial banks now range from 5-7.5 per cent per year, the lowest level over the past 10 years. Meanwhile, many securities firms are offering an interest rate of about five per cent per year for a one-week term.

"The stock market is becoming one of the most attractive investment channels now after deposit rate cuts by many banks. But since it's risky, I'll choose to keep money both in banks and securities firms," Ngoc said. — VNS

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