It is also the Covid pandemic that has squeezed the demand for investment real estate and is gradually being restarted.
Which group of real estate stocks is ‘breaking the top’?
In terms of long-term investment, Vietnam’s real estate is always a potential market. According to experts, real estate is still a safe “haven” during periods of economic crisis. That is also part of the reason why stocks of real estate businesses are having a strong breakthrough. A series of stocks maintained sustained gains, surpassing all-time highs, forming the biggest and longest tsunami in 2021. Many stocks increased 200%-300% in just a few months. Making a great contribution to the booming stock market, and closing the last session of October 2021 quite impressively when the VN-Index reached 1,444.27 points, setting a new record level after more than 21 years of establishment.
In the blue-chip group, shares of Vinhomes Joint Stock Company (VHM) are the brightest names when having the 6th consecutive increase in price after a period of “silence”. VHM’s market price has increased by 9.6% in just one week, which is considered a big increase in blue-chips.
In the midcap group HDC, NLG, IDJ, NTL, DTA… are bright names, attracting strong cash flow. Many real estate stocks also recorded their highest ever market prices. In which, the Third Joint Stock Company (DTA – Hose) in the third quarter increased by over 200% from the price range of 9,000 to nearly 27,000 VND/share. Or it can be mentioned that Dat Phuong Joint Stock Company (DPG) doubled its potential near the 3-digit price range – the highest market price ever.
This makes the market price level of all stocks raised at 40,000-100,000 VND. Currently, there are nearly a dozen stocks with a market value of over 100,000 VND, besides the “old” faces, there are new “big guys” joining such as Sunshine Homes (SSH), Hodeco (HDC), and most notably, Licogi 14 (L14)
In addition to commercial and construction real estate stocks, the group of industrial park real estate stocks also attracted quite strong cash flow. In this group, there are some prominent representatives such as SZC, PHR, VGC, LHG.
Closely related to the wave of real estate
According to a report by Batdongsan.com.vn, interest in peri-urban provinces such as Binh Duong, Long An, Ba Ria – Vung Tau all increased by 10% in September. The trend of real estate selection in areas The suburbs, where there are well-connected infrastructures, high urbanization rates, liquidity and capital are the big plus points that investors are aiming for.
Share the reason why real estate stocks “break the top”, according to Hello Group Co., Ltd.’s analysis, real estate companies, especially industrial real estate groups, can grow well. and maintain their form for a long time is thanks to 3 main reasons as follows:
The first is the need to move large factories, $23.74 billion of foreign investment flows into the market
Talking about the process industrial zone and starting with the US-China trade war caused a big wave of trade displacement. The world’s major factories began to move to Asia and Vietnam also benefited from this wave. The process of shifting supply chains from China to Southeast Asia will accelerate after the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement involving 10 ASEAN countries and Australia, China, and Japan. Japan, New Zealand and South Korea, could come into force in 2022.
Most recently, from March, the American company Apple began to shift production from China to Vietnam and increase the production of headphones in Vietnam. Or Google and Microsoft are also moving some production lines from China to Vietnam… Especially recently, the world’s media reported that the US has identified Vietnam as a priority partner in the supply chain.
In addition, in September, Vietnamese businesses signed commercial agreements and contracts worth billions of dollars with leading US corporations. For example, Quantum Group (USA) and a consortium of Kinh Bac Urban Development Corporation and Saigon Telecommunications Technology Joint Stock Company (Saigontel) have also joined hands to invest up to 30 billion USD on the same day. 9/22. Recently, T&T Group and UPC Renewables Corporation (USA) also signed a cooperation agreement worth 3 billion USD in the field of renewable energy in Vietnam.
As of October 20, 2021, the total registered foreign investment capital in Vietnam (FDI) reached $23.74 billion, up 1.1% over the same period. This shows that Vietnam continues to be a safe and attractive destination.
The second is the growth engine that comes from the upgrade of infrastructure thanks to the promotion of public investment and untangling legal procedures.
Promoting public investment is considered a key focus of the government in developing the country’s mainstream GDP in 2021. Upgrading infrastructure, convenient connections, airports and seaports creating conditions for the development of production activities, housing demand, making real estate activities more active and vibrant in terms of both selling price and demand.
Previously, legal procedures were cumbersome, overlapping and causing trouble
In an analysis chapter of the World Economic Outlook report titled “Inflation Fears” just released by the IMF, in advanced economies, headline inflation will peak at 3.6%. in the last months of 2021.
In fact, inflation risks are back in many countries around the world. The US Department of Labor on November 10 said the country’s consumer price index in October increased by 6.2% over the same period in 2020. This is the fifth consecutive month that inflation has exceeded 5%, when prices skyrocketed with items from cars, gasoline to groceries, furniture. Or just November 12, in Vietnam – Ms. Nguyen Thi Hong, Governor of the State Bank of Vietnam, said that ensuring the inflation target in 2021 is below 4% can be achieved, but in 2022, inflation risks emits a great deal of pressure.
Inflation should invest where? Should all eggs be put in one basket?… is a common question that investors are interested in. In the context that the market continuously receives information about inflation, investors need to prepare a knowledge base and a contingency plan to face possible risks.
What is inflation? Why inflation?
Inflation is a persistent general increase in the prices of goods and services over time. When the general price level spikes, a unit of currency buys fewer goods and services than before, which means a loss of value for that currency. Inflation reflects the decline in purchasing power per unit of currency.
Based on this definition, inflation is divided into three levels by experts:
• Natural inflation: 0 – less than 10%
• Rapid inflation: 10% to less than 1000%
• Hyperinflation: over 1000%
The cause of inflation can come from many factors, but according to experts, demand-pull inflation and cost-push inflation are the two main causes:
Demand-pull inflation occurs when the demand for a certain commodity increases, the price of that commodity increases. The value of related goods or services also escalates, leading to an increase in the overall market price. A typical example is that in Vietnam, an increase in gas prices will lead to an increase in freight rates, transportation of meat – fish – vegetables – tubers will also increase, shops – restaurants will increase food prices…
Cost-push inflation has a similar definition. When the price of one or more of these factors increases, the total cost of production of enterprises also increases, so the cost of products will also increase in order to preserve profits. The general price level of the economy as a whole rises.
Why is the inflation risk in Vietnam high in the 2021-2022 period?
According to the report of the Ministry of Finance – the standing body of the Steering Committee, the market price level in the first 10 months of 2021 is basically in the price management scenario set out at the beginning of the year. The data of the General Statistics Office shows that CPI in October 2021 is estimated to decrease by 0.1% – 0.15%, on average 10 months increase by 1.81% – 1.83% over the same period last year. base 10 months is estimated to increase 0.82% – 0.86%. Since the beginning of the year until now, the market price level has increased/decreased, with a high increase in some commodities due to the impact of factors and world prices.
Inflation, where should investors pour money?
In the context of inflation, what should investors do to balance and re-target their investment portfolio? According to experts, the risk of inflation can easily cause assets to “evaporate” if the investment channel is unfortunately depreciated. Therefore, investors need to put the profit factor behind, and aim to protect assets first.
So what are the investment channels that investors should consider:
Yellow
Gold is the top priority of economists and investors during periods of inflation, because this asset class has a high level of safety and is believed to be an effective anti-inflation tool. The reason is that this is a precious metal, has a long use value and is also a payment method for a long time. And most importantly, the government can trust more money, but can’t print more gold. Therefore, in the long term, the price of gold can only increase. However, the disadvantage of gold is that it cannot grow in the short term and even if it does, the increase is quite thin. Therefore, this is considered as a form of “savings” of many Vietnamese people, instead of an investment channel to earn money.
Real estate
Real estate is also a commodity. Therefore, in times of inflation, the value of this asset is still likely to increase. The indirect impact on factors such as material prices, commodity prices, house rents, etc. also causes house prices to tend to go up during periods of inflation.
However, investors also need to consider how real estate responds to inflation, because the Covid-19 pandemic has changed a lot of markets and consumer habits. Experts say that the demand for commercial real estate, such as offices and retail stores, is still difficult to break through because many companies are applying remote work policies for employees. Meanwhile, residential real estate in the inner and outer suburbs, including townhouses and apartments, is still considered a safe and liquid product line. The demand for yards and warehouses will also increase, due to the key role of the supply chain for global trade in the future after the COVID-19 pandemic.
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