Has the Vietnam Stock Market Come of Age? (Part 1)
Do Vietnamese stocks deserve your attention? This engaging country lacks the gargantuan sizes of India and China, but its average 8% GDP growth deserves careful consideration. Cheap labor and a sound agricultural base have always attracted envious foreign attention in Vietnam, so it could be time to divert some part of portfolios to the local stock exchange. It has been many months since this web site last reflected on the positives of the Vietnam stock market, and the recent instability of some first world markets indicates that it may be time to consider Vietnamese stocks afresh.
The international national spread of business now dominates all facets of stock investment. The benefits of remaining local have shrunk for most enterprises, while the best in all sectors of the stock exchange venture to new shores. Intel is amongst the US corporations that has established substantial manufacturing infrastructure in Vietnam. The country’s population represents a significant market for many classes of goods and services, so all international brands must enter this territory at some point. Some private equity stalwarts have already made large forays in to Vietnam, and the country is now watched closely even by those who do not operate here as yet.
Interesting Signals for Stock Investment
Vietnam’s membership of the World Trade Organization (WTO), significant economic progress by the country’s poor, government decisions to welcome foreign equity, and the industrious culture of the nation, are the four most important signals to the world stock market community to sit up and take notice of this part of the world. It is apparent that the domestic economy will continue to grow at about 7% per year. Vietnam also has the potential to take increasing shares of the global demand for labor-intensive products and services. Here is a potential stock investment success story of the China and India genre!
WTO negotiations are never rapid, and Vietnam’s membership has been agonizingly slow. Nevertheless, stock investors can take heart from the long term stability it has provided to Vietnamese textiles and clothing by lifting the quota regime. Vietnam has statistics to prove that it has even bettered India in the eradication of poverty, and the spread of economic benefits augurs well for the country’s fledgling stock market. Most former communist economies have hidden stock values in their large public sector companies, so the recent Initial Public Offering (IPO) of Vietcombank is writing on the wall for private equity operators and smaller stock investors alike. The country has also followed examples by China and India in welcoming foreign investment, so it does appear that investors from all over the globe can participate in Vietnam’s progress at last.