Vietnam ETF: Growth, But With Caution

December 6th at 12:00pm by Tom Lydon

The Vietnam exchange traded fund (ETF) surged a whopping 13.1% last week. While the fast-growing economy has its merits, risks still abound.

For the last 20 years, Vietnam has been one of the fastest-growing economies in Asia, averaging 7.1% growth from 1990-2009, according to AFP. At the Vietnam Business Forum last week, business leaders said the country needs serious improvements on several fronts if that growth is going to continue:

  • There needs to be more infrastructure development
  • Workers need to have updated skills in order to remain competitive
  • Bureaucracy needs to be streamlined
  • Saigon reports that other areas for improvement in Vietnam center around fiscal policy and currency pressures that have affected the exchange rate

For now, those needs aren’t slowing Vietnam’s growth. The ETF Professor for Benzinga reports that performance has been helped by a bullish GDP report, which forecasts 6.7% growth this year, with more to come in 2011. [Vietnam ETF: Weighed By Country's Governance.]

Vietnam.Net reports the booming development of the telecom sector in Vietnam has been reflected in the high growth rates of three biggest telecom networks: MobiFone, VinaPhone and Viettel. A booming mobile phone business means that the middle class has grown and more citizens can afford this luxury. [Vietnam ETF: An Alternative To China.]

Vietnam boasts all the hallmarks of a growing market – a rising middle class, more foreign investment and high GDP rates – alongside the risks of an emerging market: political instability, poor infrastructure, government bureaucracy and corruption. If you’re eager to invest in a country with enormous growth potential and you can take the risks in stride, consider Vietnam. Just have an exit strategy!

  • Market Vectors Vietnam ETF (NYSEArca: VNM)

Vietnam ETF

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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