It is hard to believe that Vietnam's stock market is only seven years old. Although the Vietnam's VM index took a 23% hit earlier this year it has still doubled over the past twelve months. A number of large IPOs and privatizations have come to the market and a few of them have not gone smoothly causing authorities to clamp down on some excesses and margin trading will likely be tightened in hopes of cooling down demand a bit while still keeping price momentum and foreign investment interest strong.
While Vietnam has a long way to go before it is even in the ballpark of being a market economy and its authoritarian Communist governnment is heavy handed, some progress is being made. A few banks will be privatized this year and foreign investment in manufacturing is ramping up. In eight months Intel has committed as much money to Vietnam as it had to China during the previous ten years. Flextronics has ramped up the production lines of a new M$400m ($110m) factory to make computer printers for Hewlett-Packard.
Oppportunities for foreign investors are limited to a few closed-ended fund listed on the London Stock Exchange. HSBC estimates that about $3 billion of capital for country funds have been raised but not yet put to work.
Posted by Carl Delfeld of the Chartwell ETF Advisor
Comments