Stock market outshines savings, real estate and gold

The stock market in Vietnam is expected to gain popularity among domestic individual investors due to its accessibility, profit potential, and changes in demographic and income levels.

According to Vndirect Securities Co, the stock market has become an attractive investment channel, outperforming other options such as savings deposits, real estate and gold.

The accessibility of the stock market compared to real estate is a key factor driving its popularity.

Real estate prices in Vietnam have reached an average of 2.67 billion dong, equivalent to 31 years of average per capita income, making the sector less accessible to the general public.

In contrast, the stock market offers a more accessible entry point for investors, especially the younger generation.

Demographic factors also contribute to the growing interest in the stock market.

With a significant portion of the population in the working age group (62.2%), individuals are looking to allocate their disposable income towards investments for future expenses and retirement.

Additionally, the increase in disposable income among Vietnamese households, with nearly 60% earning over US$5,000 per year, has further fuelled the attractiveness of the stock market as an investment option, Vndirect said. The stock market has outperformed the real estate sector over the past five years in terms of investment returns. With a compound annual growth rate of approximately 6.6% per year, the stock market has provided higher returns compared to real estate investments, which averaged 6.3% per year.

Dragon Capital experts also emphasise individual investors’ dominance in the stock market, accounting for over 88% of market participants.

They argue that stocks remain a more attractive option compared to other investments, such as real estate, which have capital requirements and liquidity limitations.

The low-interest rate environment has further incentivised investors to consider the stock market.

With savings deposit interest rates at banks around 4.7%, stocks offer a more appealing profit potential, with a 10.9% average return.

This has led to an expectation of large capital flows entering the stock market.

Dragon Capital’s projections indicate that the 80 largest listed companies in Vietnam could experience an average profit growth of 15%-18% in 2024 compared with the previous year.

This positive trend is attributed to favourable macroeconomic conditions supporting the companies.

“The stock market has become an attractive investment channel, outperforming other options such as savings deposits, real estate and gold.” Vndirect Securities Co