UK managers optimistic about Vietnam investment prospects

The article notes that the Southeast Asian country has become one of the leading emerging markets to invest in recently.     

With half of the country’s population under the age of 35, coupled with a rapidly expanding middle class, the Vietnamese economy appears to be dynamic and has not suffered as dramatically from the novel coronavirus (COVID-19) as other nations. Indeed, several wealth managers are already doing business locally, including Swiss private bank Bordier & Cie.

The article quotes Khanh Vu, co-manager of VinaCapital Vietnam Opportunity Fund, as saying that the main attraction of investing in the country is that the local economy is following in the footsteps of other “Asian Tigers” that came before it, such as Japan, the Republic of Korea, and Taiwan (China).

These factors indicate that the future trajectory of the nation’s per capita income, consumer spending, and of the general wealth of its citizens remains clear. This means that Vietnam is essentially the only Asian Tiger country left to invest in when the economic development of other Asian Tigers is considered.

Emily Fletcher, portfolio manager of BlackRock Frontiers, stated that Vietnam has turned into a poster child for frontier markets after enjoying strong economic and social development over the previous two decades. The country has also seen the benefits of more than US$149 billion in foreign direct investment inflows over the past 20 years and has benefited from accelerating supply chain migration from China, a trend that was first established well before trade tensions between China and the United States began to emerge.

This has led to huge increases in terms of manufacturing production, with imports seeing a compound annual growth rate of 15.8% over this period, whilst domestically, demographics indicate further spells of sustainable growth moving forward.

Craig Martin, manager of Vietnam Holding, anticipates that Vietnamese GDP per capita will reach US$5,000 by 2025, and by 2035 there will likely be a further 35 million middle-income consumers nationwide. As the country has a very open economy from a trading perspective, with more than 200% of its GDP in exports and imports, it represents a lucrative market for financiers. Indeed, the last three decades has seen Vietnam transform from an exporter of raw materials, to a producer of finished and semi-finished goods, as well as exporting services, such as information technology.

With regard to the handling of COVID-19, Ewan Markson-Brown, manager of Pacific Horizon, describes the country as one of the more successful in dealing with the threat of the pandemic.

In total, there has been slightly over 1,000 cases and 35 deaths domestically, with the country swiftly controlling movement both internally and externally to reduce cases to zero, although after 99 days of no cases a second outbreak did occur in Da Nang. Given the country’s relatively low level of income, it therefore proudly stands out as one of the world’s biggest success stories.

Craig Martin, manager of Vietnam Holding, emphasises that the Vietnamese handling of COVID-19 has rightly won praise and admiration from across the world. At present, it is too early to attribute any single factor as the key to the nation’s success, but certainly the cohesiveness of society and the single-mindedness of its citizens in taking on the threat has been a key part of the approach.

According to Martin, Vietnam, an early victim of SARS in 2003, regularly faces challenges from disease such as Avian Flu and Swine Flu, therefore it has arguably developed better responses, protocols, and communication systems to deal with emerging infections and pandemics compared to other nations.