Which investment channel will “take the throne” if inflation is hot?

Mar 18, 2022 14:10 GMT+7

Inflation is a top concern of global and Vietnamese investors after commodity prices escalated due to disruptions in the global supply chain caused by Covid-19. Although inflation in Vietnam is forecasted to be kept under control, short-term risks are still hidden due to the recent sharp increase in oil prices.

Analyzing the impacts of gasoline prices, Mr. Hoang Cong Tuan, Head of Macro Research Department of MB Securities Joint Stock Company (MBS), said that petrol prices only account for 3% of the CPI basket, a group of related goods. transportation accounts for 9.7%, but transportation activities have a large influence on other manufacturing industries. Therefore, the increase in petrol price can affect the CPI basket from 2-3 rounds.

Given three scenarios that affect gasoline prices on inflation, the MBS expert said that if the oil price fluctuates at 120 USD/barrel, it could affect Vietnam’s inflation from 0.8-0.9%. In the case of oil prices up to 130 USD/barrel, the impact on inflation can be from 1.2-1.4%. In the event that oil prices exceed the above threshold, Vietnam’s economy may be strongly affected.

In the context of high inflation, which channel to invest in is a headache for many investors. To preserve cash flow, many investors withdraw from risky investment channels such as cryptocurrencies, securities, etc. and look to safe investment channels such as gold, bonds, insurance, and savings. To help investors have an effective investment strategy in the context of high inflation, Mr. Nguyen Minh Quy, Chairman of Novaon Group, Chairman of Novaon Capital Investment Fund provides an analysis for several investment channels:

Mr. Nguyen Minh Quy, Chairman of Novaon Capital Investment Fund

Cash: “Cash is bought” is a popular motto of many people, but Mr. Quy believes that holding cash during inflation is not the right strategy. Giving evidence with the sharing of legendary investor Warren Buffett, the worst investment is keeping cash, because money does not generate itself, and can even decrease if inflation increases sharply.

Bank interest rate: According to Mr. Quy, bank interest rates may increase slightly from 6.5 to 7% this year. However, looking back at the past, the interest rate trend has been on a downward trend in the past 10 years. Thus, while inflation may be high and interest rates may increase only slightly, bank savings are not an attractive investment channel.

Yellow: Many investors consider gold as a safe haven investment channel in the context of tense geopolitical situations. However, it should be noted that in Vietnam, the gold price difference is too big with the world price, causing many investors to lose money in recent years. The lack of connection with the world market makes gold a risky investment channel, not favored by many investors. In particular, based on data from the last 5 years, it can be seen that the return on investment in gold is relatively low.

Therefore, the fund manager believes that Real estate and securities are still attractive investment channels At this time, in which securities are still the most promising investment channel. According to experts’ analysis, despite many difficulties in the macro situation, the profits of large enterprises on the floor still recorded an impressive growth of about 20%. GDP is also forecasted to be higher than last year when reaching around 6%.

Negative information makes the market fluctuate in short term, but in the medium term, stocks can still go up thanks to many positive prospects. In particular, short-term fluctuations are also opportunities to correct stocks. on the market at a level that is balanced and suitable for long-term investment. Accordingly, experts forecast that VN-Index can still grow by about 15-18% in 2022.

In the context of rising inflation, economic experts recommend that investors should not use leverage or borrow. Besides, it is necessary to maintain a certain amount of cash (about 10%) to be able to promptly take advantage of opportunities as well as restructure the investment portfolio.

According to Economic Life