Vietnam stands to benefit from a batch of partnerships with other countries and corporations around the world. Europe’s largest bank, HSBC, plans to open branches in Vietnam; Intel (INTC) has built a chipset assembly and testing plant in Ho Chi Minh City; Japan’s Olympus group, along with other electronics companies, are exiting China and moving to open plants in Vietnam instead.
VNM’s underlying index tracks companies that generate at least 50% of their revenues in the country, with financials, energy and materials getting the top weightings. Vietnam represents 67.9% of the index; Singapore, 7.5%; United Kingdom, 6%; Malaysia, 5%. Canada, South Korea, India and Thailand are also represented.
Like any emerging or frontier market, Vietnam should be handled with caution. It’s still a Communist country and could experience volatility as it continues to grow. We suggest having both an entry and an exit strategy to protect yourself and mitigate risk.
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