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Officially, Vietnam is the Socialist Republic of Vietnam. And ironically, considering it is a communist nation, the country’s motto is “Independence – Freedom – Happiness”.That’s not the only contradiction in the Southeast Asian country. As an emerging market that seems to stay off the radar for the most part, Vietnam has gotten some attention lately.
Starting in late November, Vietnam soared, and for good reason. Officials had raised their GDP estimates for this year to 6.7%. Then came news that 35 commercial banks agreed to limit deposit rates to 14% (the government had set a cap at 12%). The move stood to further expansion by providing capital to businesses.
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Source: stockcharts.com
And then, last week, things reversed course (as we can see based on Market Vectors Vietnam ETF). On Wednesday, Moody’s Investor Service downgraded the country’s rating to B1 (four notches below investment grade). This put Vietnam on par with Sri Lanka and Mongolia, according to Bloomberg.

The downgrade was based on a few problems: A widening trade deficit ($1.25 billion in November), capital flight, a decline in foreign reserves and a weakened currency. The result: Stocks dropped (the VN Index saw its biggest decline since August), and yields on the five-year note hit 11.59% on Thursday. But that’s understandable. Moody’s announcement came after a strong three-week rise, and the downgrade presented an opportunity for profit-taking by investors.
Moody’s isn’t alone in its lack of confidence. On its recent list of “Best Countries for Business”, Forbes ranked Vietnam 118th… out of 128. Even worse: the country came in at 120th for personal freedom, and 125th for both monetary freedom and investor protection.

But the country has positive things going on, too. In 2007, Vietnam joined the World Trade Organization. Between 2003 and 2008, the number of college and university students almost doubled, according to McKinsey Quarterly. The country’s middle class stands at 7 million households and counting. What’s more: the country’s literacy rate is now 92.5% (according to McKinsey). And in October, Boeing and Vietnamese Airlines signed an agreement for the Boeing 787-9, which participants in the deal believe will result in “an increase of trade” between the U.S. and Vietnam.

Vietnam has serious growth potential, and it also has serious problems. While growth has run around 7% for the last several years (down to 5% in 2009 due to the global crisis), inflation stood at 11% last month. And while the government signed the United Nations Convention Against Torture, it is still a communist nation, per Article 4 of its constitution. And in a bleak reminder of that reality, earlier this year the Appeals Court in Ho Chi Minh City upheld the prison sentence of Fulbright Scholar Le Cong Dinh for “trying to overthrow the state”. The bottom line: Vietnam is a growth opportunity, but one to play very carefully.

Now, Market Vectors Vietnam (VNM) is the best way to get exposure to Vietnam, and it is trading above trend lines. But remember that investments in this country should be considered speculative. I would sooner consider exposure to emerging markets as whole, with a fund such as Vanguard Emerging Markets Stock ETF (VWO).
Rezny Wealth Management may hold investments in above mentioned securities; positions can change at any time.
Disclosure: I am long VWO.
SeekingAlpha.Initializer.LogAndRun(load_article_toolbar); About the author: Brian Rezny




Brian C. Rezny is CFP & President of Rezny Wealth Management, Ltd. Rezny Wealth Management is a Fee Only Investment Advisory Firm, specializing in Portfolio Management for Pre-Retirees and Retirees. RWM is an SEC Registered Investment Advisor. Brian is also a Board Certified Financial... More

DPM chú này nên giảm về 34 đã

Vietnam is a growth opportunity

câu nói này gợi nhớ đến tay Mark Spencey, một analyst của Morgan Stanley khi viết báo cào về Việtnam năm 2006, sau đó là bùng nổ, tay ấy bây giờ là giám đốc của chứng khoán gì đó ngoài hanoi.

Thời nay cái gì cũng tăng giá vù...vù...., chỉ....chứng là chưa tăng thôi ....!!!!!!!!!

sao o tăng, bác bị loạn chưỏng do đánh sàn HA à

thanks bác nhiều, nhờ bài của bác nên sáng nay làm thêm tí giá 39 ngon quá

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chú này lỗ rồi

show đi bạn, hôm nay đỏ, mai lại xanh. Tuy nhiên hôm nay list bạn đỏ o là có vấn đề