Money to flow into securities after gold floor closes temporarily by March end

VNStockNews.com - When the gold floor will be temporarily closed by end of March as per the government's recent decision, the stock market will become more attractive for the speculative capital source.

On January 6, the stock bourses showed contrary movements: While VN Index continued rising by 1.93 points, HNX Index lost 3.7 pts. The general trading value of both floors reached over 4.793 trillion dong, increasing by 9 percent against the previous session.

After many weeks of gloomy transaction, between January 4 and 6, the stock market seemed to be more exciting. Trading value of the stock market jumped to about 4.5 trillion dong a day, a 2-3 fold increase compared with average level of previous months thanks to the government decision to halt operation of gold trading by March 31, 2010. Because most gold investors all had securities accounts, they silently transferred capital from gold floor to securities.

According to the announcement of State Bank of Vietnam (SBV), there to date have been 19 units (mainly banks) opening the gold floor. At the most exciting time, ACB gold trading floor reported gaining the trading turnover of up to eight trillion dong. Therefore, the country's virtual gold trading volume climbed to trillions of dong a day, in which gold managers lent over 93 percent of transaction gold value to investors.

Though the deposit ratio of gold trade accounts for only 7 percent, the credit source of investors on the entire market also is very high. When the gold floor is to be closed, thousands of gold investors will shift to play in stocks. Additionally, the credit source that banks previously provided to gold floor will be supplied to stock players whereby the capital for stock market will be larger.

Lunar New Year is coming, and the monetary market will see strong operations. Just in the start of 2010, a huge capital amount of demand stimulus policy has returned to banks. With such a capital flow, the capital in banks will be in surplus and the stock market will enjoy more benefits from the abundant capital after Tet holiday, said Nguyen Van Hien-director of Nam A Commercial Joint Stock Bank.

Master Le Van Minh-director of Agribank HCM City Branch stated that the monetary market is back to the normal circumstance. Many enterprises will continue receiving lending rate subsidisation and a lot of new policies will be applied on securities (like T+2 transaction, deposit trade) so investors are more optimistic. As expected, the stock market in the upcoming time will develop more sustainably.