The stock and real estate markets are assessed to benefit from the State Bank’s move to loosen the credit room.
Following the Prime Minister’s direction on considering raising the appropriate credit limit to create a driving force for economic growth, this week, the State Bank of Vietnam decided to loosen the 2022 oriented credit target, about 1.5-2% more for the whole system of credit institutions. According to the State Bank of Vietnam, more than VND 240,000 billion of capital will be loaned to the economy by the end of this year.
In the context of only 3 weeks to the end of the year, this is good news for all sectors. First, the production and business sector is expected to recover faster thanks to new capital inflows.
Streamlining capital into production and business
Mr. Tran Thanh Binh – General Director of Bilico Construction and Equipment Joint Stock Company said that the State Bank’s loosening of credit room will help businesses reduce pressure on cash flow.
“After Tet, it usually takes 1-2 months for businesses to be able to operate again, while there is no revenue in a month, cash flow from banks is very necessary,” said Mr. Binh.
Along with the extension of credit limit, many businesses also expect that banks will simplify lending procedures. Thereby, helping businesses timely have capital to timely pay for orders and year-end payments.
“Up to 75% of businesses are lacking capital, the extension of credit limits is of course very exciting. However, for the policy to be effective, practical or not, it takes time,” said Dr. To Hoai Nam – Vice Chairman of Vietnam Association of Small and Medium Enterprises assessed.
Cash flow from the expansion of the credit room will be mainly directed towards production and business
According to statistics, by the end of November, credit growth was about 12.2%. Including the loosened limit, banks will have about 3.8% room to lend in the last month of the year.
“There is a credit room, but commercial banks also have to actively mobilize idle capital in the society to create loans. The State Bank also continues to monitor the direction of cash flow using this credit room is ready to facilitate long-term capital resources for commercial banks to have stable capital sources,” said Standing Deputy Governor of the State Bank of Vietnam Dao Minh Tu. emphasize.
In order to support liquidity for the system, last week, the State Bank pumped money out through the open market with a longer term, up to 91 days, instead of the usual short term of 14 days. Long-term money source will help banks balance capital and ensure lending efficiency.
Strengthen investor confidence
Not only expanding the lending space of banks, helping manufacturing businesses feel more secure in the context of the year-end. The State Bank’s decision to increase the credit target for the whole system by 1.5-2% also immediately supported the domestic stock market.
The stock market has just ended a relatively positive trading week, VN-Index quickly regained balance after a decline session, along with the strong net buying trend of foreign investors was maintained. Experts appreciate this flexible move by the regulator, which further strengthens investor sentiment
Witnessing a stronger recovery of more than 25% of the stock market since mid-November, most individual investors are still relatively cautious, cash inflows mainly come from foreign investors and institutions. Therefore, the news that the State Bank opened credit room as a “new breeze” reinforced investors’ expectations.
The State Bank opened credit room as a “new breeze” reinforcing investors’ expectations
“The interest rate in the interbank market is around 5.4 – 6%, maintained in the context of the State Bank’s loosening of credit room, showing that short-term liquidity has improved. Overall policies of the State Bank of Vietnam, the country and the Government are showing better signs, supporting the economy and the market’s liquidity,” said Nguyen Minh Hoang – Analysis Director, Nhat Viet Securities Joint Stock Company.
On the other hand, the loosening of credit room also affects the selection and differentiation in the stock market after the strong recovery period.
Mr. Pham Luu Hung – Chief Economist, SSI Securities Joint Stock Company forecast: “When the credit room is opened, it will be important for banks to disburse that amount or not. The banking industry is probably a group. stocks are well affected, especially the top banks”.
Experts also assessed that the loosening of credit room at this time shows that the State Bank’s policies are flexible. Although the impact on cash flow on the stock market may not be too great, it is necessary to help the market enter a stable state.
“Shock” the real estate market
Not only the stock market, the State Bank’s decision to widen the credit room also has a positive psychological impact on the real estate market.
During the Government Standing Meeting on the administration of fiscal, monetary and macroeconomic policies at the end of 2022 and the beginning of 2023, Prime Minister Pham Minh Chinh requested the State Bank to have supportive policies. support people to buy social housing; review real estate projects, to support those that qualify. Credit institutions need to promote the spirit of “harmonious benefits, shared risks”.
The Prime Minister’s message has received great attention from the real estate market. Representatives of some banks said that good projects will be disbursed.
Currently, many unfinished real estate projects are facing difficulties due to lack of capital. As for home buyers, many cases have paid 70-80% of the house contract value. They are still 20-30% short to be able to get a house. But meeting the right time when the bank ran out of disbursement limit, causing them to face many difficulties. Experts say that the opening of the credit room will more or less “power” the real estate market.
Experts say that the opening of the credit room will more or less “power” the real estate market
A representative of BIDV said that in this credit room extension, the bank will still spend capital for real estate.
“We will strictly follow the Government’s policy that will support homebuyers, really good projects, meet the State’s legal regulations. We will consider to provide capital, including Both investors are in the process of completing, especially for homebuyers,” said Mr. Tran Long – Deputy General Director of BIDV.
Mr. Can Van Luc – Member of the National Financial – Monetary Policy Advisory Council said that capital flows will go into production and business, including real estate, will be relatively fast, because the documents waiting for disbursement have been completed already available. Should not be too worried that the cash flow from the expansion of the credit room will go into speculation or be too risky.
In addition, many opinions believe that to “shake up” the real estate market, it is not just about removing the bottleneck on credit capital. The root must be to solve the legal problems. Recently, the Prime Minister has decided to establish a working group to remove difficulties and obstacles in the implementation of real estate projects. Businesses expect this will be the driving force to “open up” this market.
VTV Digital | 10/12/2022
