Gold peaks, stocks languish: Experts identify opportunities for investors

DNHN - Gold prices have peaked due to political and monetary factors, but face the risk of adjustment. Stocks remain difficult to recover due to weak liquidity and ongoing foreign net sales.

Gold peaks, risk of adjustment

At the talk show titled "Gold Peaks, Stocks Languish: Where is the Opportunity?" organized by the Labor Newspaper, Mr. Phan Dũng Khánh, Investment Advisory Director at Maybank Securities, stated that currently there are many factors supporting the growth of gold prices. Political tensions, especially in the Middle East, are making gold a safe haven, attracting investors seeking stability amidst increasing risks.

In addition to political factors, one of the key reasons for the rise in gold prices is the monetary policies of countries. Central banks around the world, especially those from major economies like the U.S. and Europe, have implemented interest rate cuts, making gold an attractive investment channel. The current "favorable conditions" are all supporting gold, leading this precious metal to hit historical peaks. This not only reflects a demand for risk-averse asset accumulation but also indicates that countries are seeking ways to reduce their dependence on the U.S. dollar, promoting gold transactions amidst a global trade war and de-dollarization strategies.

Meanwhile, Assoc. Prof. Dr. Nguyễn Hữu Huân from the University of Economics Ho Chi Minh City, noted that the increasing gold reserves of BRICS countries (Brazil, Russia, India, China, South Africa) is a significant factor. These nations are aiming to reduce their reliance on the USD, creating a new monetary system where gold will play a key reserve asset role.

Despite gold prices reaching peaks, experts also warn that this precious metal may not be able to sustain a strong upward trend without encountering major adjustments. With gold prices having increased over 40% this year, many investors are concerned about the possibility of market adjustments. Experts agree that gold cannot rise indefinitely, and in the short term, there may be downturns with downward price adjustments.

Responding to questions about whether to buy gold at this time, Mr. Phan Dũng Khánh suggested that investors should only allocate a small portion, about 10% to 15% of idle cash, into gold, potentially choosing between SJC bullion or 99.99 gold jewelry. However, he also reminded investors that gold prices have surged significantly and further price increases are not effortless. If gold prices reverse, the pressure to sell for profit would be substantial, leading to the possibility of significant price declines.

Another factor impacting gold prices is the halt in gold purchases by central banks of major countries like China and India in recent months. This might cast a major stumbling block in the continued price rise of gold.

Investors struggle to profit from stocks

While gold prices continue to climb, the stock market faces difficulties. Despite positive signals from the Q3 2024 business reports of listed companies, the stock market lacks strong growth motivation. Particularly, market liquidity has diminished significantly, and foreign investors continue to record net sales with a record of nearly 80 trillion VND this year. The indifference of foreign investors, coupled with stock indices like VN-Index failing to break out of the 1,300-point range, makes the stock market less appealing.

Assoc. Prof. Dr. Nguyễn Hữu Huân believes the stock market currently is in a narrow "accumulation" phase, making it challenging for investors to profit, and they might even incur losses if not cautious. Despite positive factors such as good corporate earnings and Circular 68/2024/TT-BTC allowing foreign institutional investors to trade stocks without full payment, these factors are insufficiently strong to induce positive changes in the stock market.

He asserts that without significant catalysts like upgrading the stock market classification, VN-Index is unlikely to surpass the 1,300-point threshold and maintain stable growth. The stock market currently faces too many uncertainties, from weak liquidity to the absence of strong capital flows from both domestic and foreign investors.

So, with the contrasting picture between the gold and stock markets today, what should investors do? While gold serves as a safe haven amidst global economic and political instability, stocks seem not to be the ideal choice at this moment. However, this does not mean the stock market won't recover in the future.

Experts suggest that investors need to clearly define their goals and risk tolerance before deciding to invest in a particular market. If your goal is to seek stability and safety amidst volatility, gold may be the appropriate choice. However, if you're looking for long-term opportunities with higher profit potential, stocks might still be a worthwhile investment channel, but attention must be paid to market volatility and maintaining a long-term strategy.

Investors also need to focus on factors directly impacting gold and stock prices. Macro elements such as monetary policy, global economic conditions, especially interest rate trends and central bank policies, will be crucial in determining the trends of these two markets in the near future.

In conclusion, while gold continues to see strong growth, the stock market remains in a difficult state with no strong recovery signals. Investors need to have clear insights and exercise caution when making investment decisions. Although the opportunities in the gold market are currently very attractive, investors also need to be aware of short-term risks. As for stocks, without new strong support factors, this market will continue to face challenges in the coming time.

Phan Chinh