Investing opportunities in Vietnam

Mar 28, 2019
By Gavin Serkin

Gavin Serkin, from New Markets Media & Intelligence, explores the investment opportunities in China’s neighbour, Vietnam, in a half hour special show, Emerging Opportunities.
Report by Victoria Scholar, IG

Emerging opportunities in Vietnam

Vietnam has sparked growing interest among investors in recent years. As China’s southern neighbor, it is ‘a big beneficiary of Chinese economy growth’, says Gavin Serkin, emerging markets (EMs) expert at consulting firm New Markets Media & Intelligence. He says the US-China trade war has also benefitted Vietnam because ‘Chinese companies have been relocating there in order to skirt US sanctions’.

However, it is not all plain sailing. ‘Vietnam is also a country with its fair share of problems – not least concern right now over possible succession at the top of the Communist Party amid rumours that President Trong may be in poor health,’ says Serkin.

Last week the Vietnamese government confirmed that 75-year-old President Nguyen Phu Trong was taken ill, and a spokesperson said he would ‘resume his duties soon’. This comes two years ahead of the next five-year party conference scheduled for 2021, when Trong could step down. Amy Reynolds, lead Asia-Pacific analyst at Sibylline, says ‘while there are no clear and obvious candidates to step in for Trong at the moment, I think it is highly likely the government will find somebody from the current dominant conservative faction who will be able to step in quite seamlessly and fill Trong’s boots and very much continue with the policy agenda we are seeing at the moment.’

Trong has been working on an anti-corruption drive in Vietnam, impacting politicians and ministers. Serkin says that according to some rankings, Vietnam is ‘one of the more corrupt countries’, posing a key challenge to investors. However, Mike Sell, head of Asian equities at Alquity, believes there are still plenty of opportunities. He points to property company, Nam Long and the majority government owned Vietcombank in the financial sector as potential investment ideas and stocks within his own portfolio. Vietcombank is ‘the shining example of corporate governance not just in Vietnam but throughout South-East Asia’.

Kevin Snowball, chief executive officer (CEO) of PXP Vietnam Asset Management, sees disruption to global supply chains from the US-China trade war, but is confident that Vietnam is well placed to benefit. He sees a ‘possibility that Vietnam could be upgraded to the watchlist for MSCI’, which might eventually be upgraded to EMs status.

For more on Vietnam’s investment opportunities, watch the video at the top of the page, or here:

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