Vietnam is thriving.
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.