Check out Vietnam

Saturday, September 2, 2006
By Faisal Laljee

China and India are old news. But there is one place that is proving to be a sound choice for investors this year. If you invested in Vietnam early this year, you are up 60%. Here are some facts about Vietnam that make it a promising investment over the next couple of years.

  • Intel is planning a $300 million dollar chip plant there.
  • Vietnam is home to the 2nd largest Nike production facility after China.
  • Over 50% of Vietnam’s population is under 25 years.
  • A recent leadership change is dedicated to reforming various government owned sectors through privatization.
  • 70% of products manufactured are exported – 2/3 of which is exported to the US.
  • There is a good chance that Vietnam will become a member of the World Trade Organization this October. Once this happens, it will open up Vietnam to many more financial markets worldwide.
  • GDP growth is currently between 7%-8%, second only to China among all Asian nations.
  • Labor and production costs in Vietnam are one-third the cost of that in China, giving Vietnam a competitive advantage over China.

There are a few things that investors should keep in mind though. Vietnam’s stock market only consists of a little over 40 companies, although privatization should increase this number. Additionally, Vietnam’s market is only about 6 years old, which means there is not much history to learn from. Lastly, Vietnam’s economy is mostly consumer driven. For an economy to sustain itself long-term, it needs to be driven by businesses.

Nevertheless, I believe Vietnam is a worth a look for investors vary of China, Brazil and India. Look for investments in the infrastructure, banking and consumer related stocks. If you find any, share them with me.

– Faisal Laljee

Update on Aug 17, 2009

Almost 3 years after my post above, we finally have an easy way to invest in Vietnam. VNM is the ETF that allows you to invest in the largest companies in Vietnam and it went live just last week. Vietnam is still a great growth story and any pull back is a good opportunity to buy.

– Faisal Laljee

Full Disclosure: I do not own VNM but my position can change anytime without notice.

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3 Responses to “Check out Vietnam”

  1. Saul Sterman

    telaat-
    Are you trying to say that you would prefer gambling at a casino rather than invest in Vietnam?
    Faisal- just kidding…
    Saul

    #222
  2. T

    I enoyed your blog. Viet Nam is obviously a tricky place to invest without some intimate knowledge of the economic workings of the central government – and I do not think they will be especially transparent. Maybe the best route would be to locate and invest in the private, growth oriented banks that have been given permission to work finances in the country. Icici (IBN) seems to have a nice concession in India. I really can’t name one for Viet Nam at this time.

    My new blog is http://www.investingfromtheright@blogspot.com

    Your comments are welcome as I ramp it up.

    #224

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