Cash flow to stock market forecast to be weaker in 2010

VNStockNews.com - Experts are warning that cash flow from banks to the stock market in 2010 will be weaker meaning fewer opportunities for investors.

Banks’ doors will be narrow

The new follows experts’ belief that commercial banks will not push up lending in 2010, as the credit growth rate is capped at 25 percent.

In fact, banks will have little capital to lend. From January 1, 2010, banks will be able to use 30 percent of short term capital only for medium and long term lending instead of 40 percent as previously applied. This means cash flow to the stock market would slow.

According to Vu Huu Dien, deputy director of Dragon Capital investment fund, the Government is prioritizing the fight against inflation as experts warn a state budget deficit and high inflation may return. This means the State Bank of Vietnam is likely to apply a tightened monetary policy, which will certainly influence cash flow to the stock market.

High hopes put on foreign capital flow

While believing that the cash flow from domestic sources will slow in 2010, experts believe foreign capital flow will be stronger.

Tran Vu Minh Hai, analysis expert at Dong A Securities Company, says foreign investors will invest more money in Vietnam’s stocks because they have high hopes for the recovery of Vietnam’s economy. However, major foreign investors will consider making outward investments only after they can settle domestic problems

According to Hai, the VN Index will be around 600 points with +/-10 percent.

Some experts believe the real estate market will only come to life in the second half of 2010, therefore, investors should put their money on the stock market in the first half of the year.

In hindsight 2009 has been a year of major stock events. The biggest trading volume per trading session ever reported was 100 million shares. The VN Index once hit the bottom at 250 scores, equal to just 20 percent of the highest peak gained in 2008.