The promise of increased foreign ownership limits and compelling valuations have already prompted increased foreign direct investment and Forbes reports that the Vietnamese government could lift the foreign ownership limits this month or by February with the new laws taking effect in the second quarter.
That could help VNM skirt another second- to third-quarter swoon, something the ETF endured the past two years. VNM was up 31% in 2013 through mid-February, but after trading around $23.40 in February, the ETF had sunk below $19 by late April. [Vietnam ETF Soars in Early 2013]
VNM allocates almost 14% of its combined weight to the materials and consumer staples sectors, which are expected to be leaders of Vietnamese earnings growth in the year ahead. As is typical of many single-country emerging and frontier markets ETFs, Vietnam has a significant financial services allocation (almost 38%), indicating the fund could benefit from or is vulnerable to successful or unsuccessful efforts to reform Vietnam’s fractured banking system.
Market Vectors Vietnam ETF
ETF Trends editorial team contributed to this post.