Viet­nam is thriv­ing.

Shares - - MONEY MATTERS - Andy Ho Vi­naCap­i­tal Viet­nam Op­por­tu­nity Fund

While other fron­tier and emerg­ing mar­kets have had a tough go in 2018, Viet­nam con­tin­ues to grow. In 2018, its GDP is ex­pected to rise 7%, com­ing off 6.8% growth in 2017. For­eign di­rect in­vest­ment con­tin­ues to reach new highs, mostly from com­pa­nies look­ing to es­tab­lish or ex­pand man­u­fac­tur­ing op­er­a­tions – Viet­nam has quickly be­come the man­u­fac­tur­ing hub of South­east Asia. These com­pa­nies are driv­ing ex­port growth, and for the first nine months of 2018 ex­port value rose 15% to reach US$179 bil­lion, much of that con­sist­ing of high-tech items such as mo­bile phones and mi­crochips go­ing to the EU and UK, the US, and China. Viet­nam’s ag­gres­sive ef­forts to in­te­grate into the global econ­omy via free trade pacts, in­clud­ing the re­cently signed CPTPP and the EU-Viet­nam Free Trade Agree­ment, are reap­ing div­i­dends. In­vest­ment is also cre­at­ing more and bet­ter pay­ing jobs for Viet­nam’s 95 mil­lion peo­ple, more than half of whom are un­der the age of 35. Many are mov­ing from ru­ral ar­eas to cities – Viet­nam boasts Asia’s high­est ur­ban­i­sa­tion rate – to seek bet­ter in­comes and op­por­tu­ni­ties for them­selves and their fam­i­lies. This in turn has cre­ated solid de­mand for new homes, bet­ter ed­u­ca­tion, health­care, and fi­nan­cial ser­vices, and dis­cre­tionary spend­ing, as the rapidly grow­ing mid­dle class, ex­pected to reach 33 mil­lion peo­ple by 2030, looks to spend in­creased dis­pos­able in­come. Spurred on by strong in­ter­na­tional in­vestor in­ter­est, pri­vate sec­tor IPOs and a newly ag­gres­sive push by the Viet­namese govern­ment to pri­va­tise state-owned en­ter­prises, Viet­nam’s stock mar­kets have ex­panded dra­mat­i­cally. The to­tal mar­ket cap for the more than 1,500 com­pa­nies listed on Viet­nam’s three ex­changes is ap­prox­i­mately US$193 bil­lion, mak­ing the fron­tier mar­ket much larger than some emerg­ing mar­kets such as Pak­istan (US$59 bil­lion). FTSE Rus­sell in­cluded Viet­nam on its watch­list for up­grade to emerg­ing mar­ket sta­tus in Septem­ber. Add in con­trolled in­fla­tion, a rel­a­tively steady cur­rency and a sta­ble govern­ment com­mit­ted to fur­ther re­form­ing the econ­omy for con­tin­ued sus­tain­able growth and it is easy to see why Viet­nam is far bet­ter po­si­tioned to weather global uncer­tainty than many other fron­tier and emerg­ing mar­kets, and why grow­ing num­bers of in­ter­na­tional in­vestors have been at­tracted to Viet­nam.

How to in­vest in Viet­nam? The Vi­naCap­i­tal Viet­nam Op­por­tu­nity Fund

Launched in 2003, the Vi­naCap­i­tal Viet­nam Op­por­tu­nity Fund (VOF) is one of the largest and most suc­cess­ful in­vest­ment ve­hi­cles fo­cused on Viet­nam. VOF is unique from other funds in that it can in­vest across as­set classes, such as listed eq­ui­ties, pri­vate eq­uity, and govern­ment pri­vati­sa­tions, en­abling it to par­tic­i­pate in all seg­ments of Viet­nam’s vi­brant econ­omy. VOF be­lieves that the most com­pelling in­vest­ment op­por­tu­ni­ties are in com­pa­nies par­tic­i­pat­ing in Viet­nam’s do­mes­tic con­sump­tion growth story, sec­tors such as con­sumer dis­cre­tionary, ed­u­ca­tion, fi­nan­cial ser­vices, con­struc­tion and ma­te­ri­als, and in­fras­truc­ture. Ex­am­ples of some of our key in­vest­ments in­clude Vi­namilk, the coun­try’s largest food and bev­er­age com­pany, with a US$13 bil­lion mar­ket cap­i­tal­i­sa­tion; Vi­etJet Air, Asia’s fastest grow­ing low-cost air­line; Hoa Phat Group, the lead­ing steel man­u­fac­turer; and most re­cently, Tam Tri Med­i­cal, a new pri­vate health­care net­work that is ex­pand­ing to meet the grow­ing med­i­cal needs of Viet­namese peo­ple. With ex­ten­sive in­vest­ment ex­pe­ri­ence in Viet­nam and in­ter­na­tion­ally, VOF’s se­nior lead­ers have de­vel­oped an ex­pan­sive net­work that gives the fund ex­po­sure to op­por­tu­ni­ties not avail­able to oth­ers, con­tribut­ing to the fund’s strong re­sults. VOF’s one-year net as­set value/share in­creased 18%. VOF is also the only Viet­nam-fo­cused fund to pay div­i­dends. VOF was in­cluded in the FTSE 250 In­dex ear­lier this year, a tes­ta­ment to both the strength of our model and the tremen­dous op­por­tu­ni­ties avail­able in Viet­nam to­day.

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