Vietnam Holding explains the enthusiasm for country as a place to invest

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Vietnam is emerging as one of the most dynamic frontier economies with half of its population under the age of 35 and a rapidly expanding middle class, says The Association of Investment Companies (AIC).

It has also been a COVID-19 success story registering just 35 deaths from 1,168 cases.

The AIC has spoken to investment company managers investing in Vietnam about why the country has such potential.

Vietnam Holding

Craig Martin, the manager of Vietnam Holding (LON:VNH) explained his enthusiasm.

 “Vietnam’s GDP per capita is expected to reach $5,000 by 2025, and by 2035 there could be a further 35 million middle-income consumers in the country.

“We think this provides exciting prospects for investors.

“Vietnam is a very open economy from a trade perspective, with more than 200% of its GDP in exports and imports.

“Over the last three decades it has transformed from an exporter of raw materials, to a producer of finished and semi-finished goods, as well as exporting services – such as information technology.”

COVID-19

“Vietnam’s handling of COVID-19 has rightly won praise and admiration from many other nations.

“Books will be written on how Asia as a whole dealt with the pandemic versus ‘the West’ and ‘the rest’.

“It is too early to attribute any one factor as the key success factor, but certainly the cohesiveness of society and the single-mindedness of the people in taking on a threat has been a key part of the resilient response.

“Let’s not forget that Vietnam was an early victim of SARS in 2003, and regularly faces disease risk from Avian Flu and Swine Flu, so arguably has developed better responses, protocols and communications to deal with emerging infections, and indeed pandemics.”

Vietnam specialism

 “Vietnam is likely to be the largest constituent of the MSCI Frontier Market index by the end of 2020, and already has many characteristics of an emerging market opportunity (100 million people, $180 billion market capitalisation).

“Along with China it is one of the few growth stories in 2020 and is positioned for a strong 2021. The manager of Vietnam Holding, Dynam Capital, has a Vietnamese team on the ground, who are able to research and react to market developments in a nimble fashion.

“We also have the ability to build and manage a concentrated portfolio – we have around 25 positions in the Vietnam Holding portfolio currently – and this focus enables us to deliver on our ESG strategy.

“Vietnam Holding has been a signatory of the United Nations Principles for Responsible Investment for over a decade – one of the first firms in Vietnam to chart a course of responsible investing.”

Relationship with China

 “China is an important trading partner for Vietnam. As China develops and grows, there is likely to be a demand for agriculture and aquaculture products from Vietnam, as well as processed food products.

“As the US rallies support for a bipartisan ‘us versus them’ approach to China, Vietnam is positioned to be an increasingly important alternative destination for manufacturing – which would further increase its foreign direct investment and hasten infrastructure development. The multiplier effect of this will also benefit the domestic market.”

Shares in Vietnam Holding were unchanged at 153.5p.

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