UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Truong Trung Tai FACTORS AFFECTING INTENTION TO INVEST IN GOLD: EVIDENCE FROM HO CHI MINH CITY, VIETNAM MASTER OF BUSINESS Ho Chi Minh City – Year 2016 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business - Truong Trung Tai FACTORS AFFECTING INTENTION TO INVEST IN GOLD: EVIDENCE FROM HO CHI MINH CITY, VIETNAM ID: 60340102 MASTER OF BUSINESS SUPERVISOR: DR PHAM PHU QUOC Ho Chi Minh City – Year 2016 Master Thesis FACTORS AFFECTING INTENTION TO INVEST IN GOLD: EVIDENCE FROM HO CHI MINH CITY, VIETNAM Truong Trung Tai University of Economics HCMC International School of Business Table of Contents Acknowledgement Abstract Chapter 1: Introduction 1.1 Background 1.1.1 Gold as a global feature asset 1.1.2 Demand for gold in Vietnam 13 1.2 Problem statement 15 1.3 Objectives and Aims 16 1.4 Research scope 16 1.5 Significance of research 16 1.6 Thesis structure 17 Chapter 2: Review of Literature 19 2.1 Intention to invest in gold 19 2.2 Factors affect intention to invest in gold 22 2.2.1 Economic benefits of investing 22 2.2.2 Macroeconomic unexpected concern 24 2.2.3 Perceived insecurity 25 2.2.4 Convenience to invest 27 Chapter 3: Method and Data 29 3.1 Theorical model 29 3.2 Hypothesis 29 3.3 Qualitative research 30 3.3 Measurement 31 3.4 Sample 35 3.5 Data Analysis steps 35 Chapter 4: Data Analysis and Results 36 4.1 Descriptive statistics 36 4.2 Data reliability test with Cronbach’s Alpha 38 4.3 Exploratory Factor Analysis (EFA) 41 4.4 Regression analysis 44 4.5 Discussion of findings 47 Chapter 5: Conclusion 50 5.1 Conclusion 50 5.2 Implications 52 5.3 Research limitation 53 References 54 Appendices 60 Appendix A: Questionnaire 60 Appendix B: Codified variables 63 Appendix C: EFA results of independent and dependent variables 66 Appendix D: Regression results 72 List of tables Table 1: Sample specification 36 Table 2: Cronbach’s alpha of measurement scales 39 Table 3: EFA results 41 Table 4: Correlations of variables 44 Table 5: The ANOVA analysis 45 Table 6: Regression results 46 Table 7: Summary of hypothesis testing 47 List of figures Figure 1: Top 30 countries/organization holding gold as reserve assets (tonnes) 10 Figure 2: World gold demand in period 2000-2015 11 Figure 3: World gold price period 1970-2015 11 Figure 4: Gold ETF holding in global market 12 Figure 5: Gold demand in selected countries 13 Figure 6: Vietnam gold demand period 2000-2015 14 Acknowledgement I would like to express my sincere thankfulness to my research advisor, Dr Pham Phu Quoc, who has guide me and gave me possibility to complete this thesis I am sure that this thesis would not have been possible without his support I also thank Prof Nguyen Dinh Tho for his expert, valuable guidance, insightful comments, and encouragement extended to me I would like to express my gratitude to all ISB staffs that supported necessary materials and assistance Especially, I would like to give my special thanks to my parent who gave me invaluable advices and motivation in my life Truong Trung Tai Abstract According to World Gold Council 2015 report, Vietnam is one of top gold consuming countries The impact of gold on Vietnam economy is uncontroversial This study aims to investigate the factors affecting people’s intention to use gold as investment instrument With the sample of 247 individuals in HCMC, the results show that three factors (Economic Benefits, Macroeconomic Concern, and Perceived Insecurity) impact significantly on Intention to Invest in gold Keywords: gold, investment behavior, Vietnam, determinants, reasoned action approach Chapter 1: Introduction 1.1 Background 1.1.1 Gold as a global feature asset Historically, people are using gold in decoration and reserve assets since thousands year ago Gold is a noble metal with special specifications: eternal shiny color over time because it does not oxidize, the valuable material because gold is the most malleable and ductile of all the metals, and especially gold is rather scarce with estimating gold in the earth around 170,000 tones Gold was first used as jewelry in 3000 B.C at Middle Eastern After 1500 years, the Shekel, first form of gold coin, was used as standard of trading and exchange for goods in area In 1091 B.C, gold was used as form of money in China, a big country of ancient Asia land Since the beginning of 18th century until the shutdown of Bretton Wood regime in 1970s, gold is used as international standard for conducting transactions and currency exchange around the world In global context, gold is accepted as “real money”, unlike other legal tender currency have to depend on the political and economic influence of issuing country for secure its value This is the reason why most of central banks always keep a portion of gold in their foreign reserve The United States not only as a strongest economy, is also a country holds the largest gold stock in their treasury 10 Figure 1: Top 30 countries/organization holding gold as reserve assets (tones) Source: World Gold Council, 2015 Gold is also used for industrial materials, religious customs as well as to represent wealth and power around the world (Bernstein, 2000) Because of its usefulness, the intrinsic value of gold still maintain high and irreplaceable Gold demand in global market is increasing because of recent chaos in international financial market, as well as some war risk around the world Gold prices increased continuously since the dot-com collapse in the year 2000 Then gold price was supported by a series of economic crises followed, such as “the global financial crisis in year 2008”, “the Greek public debt crisis in year 2010” Its reach the peak at more than 1650 USD / ounce in the year 2012, then gold price decreases after the recovery of the US economy was confirmed 59 Thuy, T (2013, June, 28) Reserve tones of gold, Vietnamese people get lost thousands of billions Vietnamnet Newspaper Retrieved May, 10 2014, from http://vietnamnet.vn/vn/kinh-te/128924/tru-tram-tan-vang nguoi-viet-thiet-hai-nganty.html Vy, T (2014, April 21) Real estate, gold, stocks, or saving deposits? Thanh Nien News Retrieved from http://www.thanhnien.com.vn/pages/20140420/bat-dong-san-vang- chung-khoan-hay-gui-tiet-kiem.aspx World Bank (2013) Worldwide Governance Indicators [PDF file] Retrieved from http://info.worldbank.org/governance/wgi/pdf/c234.pdf World Gold Council (2014, Feb) Gold demand trends: Full year 2013 [PDF file] Retrived May, 10 2014, from http://www.gold.org/sites/default/files/GDT_Q4_2013.pdf Worthington, A.C., & Pahlavani, M (2006) Gold investment as an inflationary hedge: Cointegration evidence with allowance for endogenous structural breaks University of Wollongong School of Accounting and Finance Working Paper Series No 06/05 60 Appendices Appendix A: Questionnaire Dear Sir/Madam, I am conducting the research at International School of Business (ISB) for my master thesis My research topic is about factors affecting intention to invest in gold I would appreciate for your support if you spend a few minutes to fill in this questionnaire Please note that there are no right or wrong answers, so you could response as your feeling I Personal information - Name: ……………………… - Gender:  Male  Female - Age: 51 Private business owner Others - Income per month (million VND): 20 Single - Education:  High school diplomat  Undergraduate  Graduate  Doctorate  Others - Gold investment experience: Yes No - Place to buy gold: Jewelry shop Banks Others 61 II Main content With the following statements, please check cross (X) the number that most fits your opinion (Anchored by: strongly disagree; Disagree; Disagree somewhat; Neutral; Agree somewhat; Agree; Strongly agree) No Item Rating scale Please give your opinion about benefits of investing in gold: Gold have high liquidity compare with other investment vehicles Gold have higher profitability than other investment vehicle I don’t have to pay income tax when selling gold I buy gold because gold is a safe investment I think gold price will increase in the future I buy gold because it is accepted internationally 7 I buy gold to diversify my portfolio investment Please give your opinion about following macroeconomic concerns: The inflation rate will be higher in the coming period I think the economic growth will be slowdown 10 The Vietnamese currency exchange rate with USD will 7 depreciate in the future 11 The foreign investment flows will decrease in future 62 12 The money supply will increase in the future Please give your opinion if you worry about: 13 Getting serious sick 14 Losing your job 15 Being a victim of a theft 16 Being discriminated 17 Being a victim of terrorist attack 18 Immigrant moving to live next to your house 19 Being a victim of a natural disaster 20 Someone hacking your computer Please give your opinion about following statement: 21 I easily to find a physical store to buy/sell gold 22 I could buy/sell gold at anytime I want 23 I could use any method of payment as to buy/sell gold as I want 24 It take very little time to decide to buy/sell gold 25 If I change my mind after make purchase I could resell gold 7 without any difficulties Please give your opinion about Intention to invest in gold: 26 There is high probability that I will invest in gold in next three month 63 27 I would consider investing in gold in next three month 28 I want to invest in gold in the next three month Thank you for your answers We will deliver research result as your demand Appendix B: Codified variables Name Label Measure ECO1 Gold have high liquidity compare with other investment Scale vehicles ECO2 Gold have higher profitability than other investment vehicle Scale ECO3 I don’t have to pay income tax when selling gold Scale ECO4 I buy gold because gold is a safe investment Scale ECO5 I think gold price will increase in the future Scale ECO6 I buy gold because it is accepted internationally Scale ECO7 I buy gold to diversify my portfolio investment Scale MAC1 The inflation rate will be higher in the coming period Scale MAC2 I think the economic growth will be slowdown Scale MAC3 The Vietnamese currency exchange rate with USD will Scale depreciate in the future 64 MAC4 The foreign investment flows will decrease in future Scale MAC5 The money supply will increase in the future Scale SEC1 Getting serious sick Scale SEC2 Losing your job Scale SEC3 Being a victim of a theft Scale SEC4 Being discriminated Scale SEC5 Being a victim of terrorist attack Scale SEC6 Immigrant moving to live next to your house Scale SEC7 Being a victim of a natural disaster Scale SEC8 Someone hacking your computer Scale CON1 I easily to find a physical store to buy/sell gold Scale CON2 I could buy/sell gold at anytime I want Scale CON3 I could use any method of payment as to buy/sell gold as I Scale want CON4 It take very little time to decide to buy/sell gold Scale CON5 If I change my mind after make purchase I could resell gold Scale without any difficulties INT1 There is high probability that I will invest in gold in next Scale three month INT2 I would consider investing in gold in next three month Scale 65 INT3 I want to invest in gold in the next three month Scale ECO Economic benefits from investing in gold MAC Macroeconomic concerns SEC Perceived insecurity CON Convenience to invest INT Intention to invest AGE 51 Male Female Private Officer Public officer Private business owner Others < mil 5-9 mil 10-15 mil 16-20 mil >20 mil Single Married Highschool diplomat Undergraduate Graduate Doctorate Sum of ECO1-> ECO7 Sum of MAC1>MAC5 Sum of SEC1>SEC8 Sum of CON1>CON5 Sum of INT1>INT3 Code=1 Code=2 Code=3 Code=4 Code=5 Code=1 Code=2 Code=1 Code=2 Code=3 Code=4 Code=1 Code=2 Code=3 Code=4 Code=5 Code=1 Code=2 Code=1 Code=2 Code=3 Code=4 GENDER JOB INCOME MARRIAGE EDUCATION 66 EXPERIENCE (in gold investment) PLACE (to buy gold) Others Yes Code=5 Code=1 No Jewelry shop Code=2 Code=1 Banks Others Code=2 Code=3 Appendix C: EFA results of independent and dependent variables KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity 872 Approx Chi-Square 4705.844 df 378 Sig .000 Communalities Initial Extraction INT1 935 947 INT2 937 967 INT3 513 490 ECO1 602 614 ECO2 671 693 ECO3 687 706 ECO4 685 720 ECO5 720 750 ECO6 600 595 ECO7 676 702 MAC1 691 735 MAC2 713 738 MAC3 675 705 67 MAC4 697 701 MAC5 705 736 SEC1 441 447 SEC2 438 461 SEC3 382 405 SEC4 403 409 SEC5 446 455 SEC6 376 372 SEC7 366 400 SEC8 450 500 CON1 700 729 CON2 705 741 CON3 711 748 CON4 676 692 CON5 663 675 Extraction Method: Principal Axis Factoring Total Variance Explained Rotation Sums of Squared Factor Total Initial Eigenvalues Extraction Sums of Squared Loadings % of Variance Cumulative % Total % of Variance Cumulative % Loadingsa Total 5.479 19.566 19.566 5.190 18.537 18.537 4.894 4.658 16.636 36.202 4.339 15.496 34.033 3.994 3.877 13.846 50.048 3.403 12.154 46.187 3.689 3.637 12.989 63.036 3.321 11.860 58.046 3.485 1.783 6.369 69.405 1.580 5.643 63.689 3.204 709 2.533 71.938 700 2.499 74.437 658 2.352 76.789 619 2.211 79.000 10 581 2.075 81.075 11 555 1.981 83.056 68 12 459 1.639 84.696 13 430 1.535 86.231 14 386 1.378 87.609 15 372 1.327 88.936 16 359 1.282 90.218 17 353 1.262 91.480 18 309 1.105 92.585 19 285 1.019 93.603 20 275 982 94.585 21 247 883 95.468 22 241 861 96.329 23 233 833 97.162 24 208 744 97.905 25 203 725 98.630 26 179 641 99.271 27 171 612 99.883 28 033 117 100.000 Extraction Method: Principal Axis Factoring a When factors are correlated, sums of squared loadings cannot be added to obtain a total variance Factor Matrixa Factor INT1 551 295 327 024 -.670 INT2 571 280 319 057 -.677 INT3 419 248 206 063 -.454 ECO1 668 -.337 -.218 -.073 027 ECO2 725 -.324 -.166 -.138 130 ECO3 759 -.309 -.142 -.046 116 ECO4 729 -.381 -.095 -.152 105 ECO5 735 -.377 -.210 -.126 083 ECO6 673 -.316 -.195 -.063 028 ECO7 717 -.353 -.213 -.078 103 MAC1 335 628 335 -.215 264 MAC2 314 602 399 -.179 294 69 MAC3 386 585 328 -.195 261 MAC4 293 621 349 -.250 213 MAC5 363 630 332 -.220 222 SEC1 098 -.252 435 411 126 SEC2 071 -.223 415 478 076 SEC3 052 -.170 412 441 096 SEC4 062 -.225 429 404 088 SEC5 057 -.274 478 377 077 SEC6 084 -.246 332 439 -.034 SEC7 077 -.263 417 380 078 SEC8 099 -.262 379 502 157 CON1 167 436 -.437 564 046 CON2 192 439 -.426 570 078 CON3 160 465 -.451 548 042 CON4 204 394 -.425 561 013 CON5 203 431 -.426 515 036 Extraction Method: Principal Axis Factoring a factors extracted iterations required Pattern Matrixa Factor INT1 -.005 016 -.029 -.007 972 INT2 012 -.005 -.005 014 982 INT3 007 033 049 007 678 ECO1 773 -.074 027 -.033 042 ECO2 839 059 -.021 -.014 -.038 ECO3 832 054 042 058 -.003 ECO4 842 044 -.095 031 -.005 ECO5 868 -.024 -.015 -.031 -.005 ECO6 758 -.053 032 -.017 052 ECO7 842 -.016 031 -.003 -.026 MAC1 -.003 857 015 -.014 -.007 MAC2 -.023 874 -.005 065 -.032 MAC3 056 835 022 010 002 70 MAC4 -.047 822 -.033 -.044 035 MAC5 008 837 013 -.030 043 SEC1 032 040 -.023 670 -.032 SEC2 -.024 -.011 038 678 016 SEC3 -.050 037 036 640 -.003 SEC4 -.018 020 -.023 640 000 SEC5 -.013 009 -.091 664 013 SEC6 -.005 -.122 036 576 109 SEC7 016 -.005 -.048 626 005 SEC8 049 006 072 708 -.075 CON1 -.015 -.004 855 004 -.005 CON2 009 029 862 024 -.029 CON3 -.029 007 862 -.026 -.001 CON4 020 -.035 830 015 034 CON5 017 015 817 -.021 014 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization a a Rotation converged in iterations Structure Matrix Factor INT1 213 356 082 089 972 INT2 233 339 104 113 983 INT3 161 275 128 070 697 ECO1 780 -.041 038 019 190 ECO2 830 060 -.007 025 168 ECO3 836 067 055 097 213 ECO4 842 046 -.082 078 192 ECO5 865 -.009 -.004 019 176 ECO6 769 -.017 045 033 205 ECO7 837 -.007 039 041 161 MAC1 010 857 094 -.086 294 MAC2 -.011 856 068 -.010 276 MAC3 072 837 098 -.056 311 71 MAC4 -.027 834 048 -.108 306 MAC5 031 856 096 -.094 338 SEC1 062 -.027 -.055 667 053 SEC2 018 -.058 005 678 078 SEC3 -.014 -.014 006 632 066 SEC4 017 -.035 -.053 639 064 SEC5 025 -.049 -.122 668 069 SEC6 050 -.127 008 595 126 SEC7 051 -.059 -.079 630 063 SEC8 072 -.071 030 700 016 CON1 -.004 071 853 -.040 086 CON2 017 096 860 -.023 083 CON3 -.019 087 864 -.071 089 CON4 040 052 830 -.019 121 CON5 031 097 821 -.060 113 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization Factor Correlation Matrix Factor 1.000 018 014 056 225 018 1.000 092 -.082 352 014 092 1.000 -.049 112 056 -.082 -.049 1.000 099 225 352 112 099 1.000 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization 72 Appendix D: Regression results Variables Entered/Removeda Variables Model Variables Entered SUM_CON, Removed Method SUM_ECO, Enter SUM_SEC, SUM_MACb a Dependent Variable: SUM_INT b All requested variables entered Model Summary Model R Std Error of the Square Estimate R Square 428a Adjusted R 183 170 2.348 a Predictors: (Constant), SUM_CON, SUM_ECO, SUM_SEC, SUM_MAC ANOVAa Model Sum of Squares Regression df Mean Square 299.545 74.886 Residual 1334.285 242 5.514 Total 1633.830 246 a Dependent Variable: SUM_INT b Predictors: (Constant), SUM_CON, SUM_ECO, SUM_SEC, SUM_MAC F 13.582 Sig .000b 73 Coefficientsa Standardized Unstandardized Coefficients Model B Std Error (Constant) 6.407 1.519 SUM_ECO 091 026 SUM_MAC 178 SUM_SEC SUM_CON a Dependent Variable: SUM_INT Coefficients Beta t Sig 4.218 000 203 3.489 001 030 344 5.884 000 075 038 116 1.983 049 045 032 083 1.414 159 ... ECONOMICS HO CHI MINH CITY International School of Business - Truong Trung Tai FACTORS AFFECTING INTENTION TO INVEST IN GOLD: EVIDENCE FROM HO CHI MINH CITY, VIETNAM ID: 60340102 MASTER OF BUSINESS... PHU QUOC Ho Chi Minh City – Year 2016 Master Thesis FACTORS AFFECTING INTENTION TO INVEST IN GOLD: EVIDENCE FROM HO CHI MINH CITY, VIETNAM Truong Trung Tai University of Economics HCMC International... study aims at following objectives: (1) To find out the investment behaviors toward gold of Vietnamese people (2) To explore what factors affecting intention to invest in gold in Vietnam 1.4 Research