Banking & Finance

The lack of easy access to cheap bank credit has pushed up demand for capital mobilization via corporate bond issuances. Because corporate bond interest rates are still quite high compared to bank deposit rates, the bond market is forecast to continue to grow strongly in the second half of 2021.

Active funds saw a net withdrawal of $191.6 million in the first seven months of 2021, while exchange-traded funds (ETFs) saw a net withdrawal of nearly $700 million. Vietnam is still receiving the most foreign capital in Southeast Asia. August ETF inflows, however, are likely to be weaker than in July. Some experts believe that this is due to the risk of inflation and the ongoing pandemic.

The tax sector will strengthen the solutions available to prevent tax losses, such as applying information technology and artificial intelligence to limit tax evasion and transfer pricing. Starting from this month, collections are being conducted via e-commerce platforms, which are responsible for providing and sharing information with tax authorities.

Most long-term forecasts indicate that the VN-Index could reach 1,400-1,450 points by the end of the year, from around 1,365 points now. Investors, however, still need to anticipate the following four risks: a prolonged outbreak of Covid-19 leading to lower-than-expected GDP growth, cash flow leaving securities for production and business, rising inflation, and falling profit growth.

Experts have pointed out that when deposit interest rates are cut to support production, corporate bond interest rates are higher and attract more funds from investors and individuals. High-interest rates come with high risks, however, such as businesses using capital to issue bonds to turn bad debt into good debt and turn old debt into new debt, which leads to a high risk of default.

Bank profits were up and down in the second quarter of 2021, with most private commercial banks growing strongly while State-owned commercial banks posted lower figures. State-owned banks have also adjusted profit targets downwards, which in turn enables them to access better lines of credit.