Although stable by comparison to Nigeria and Pakistan, Vietnam, another readily accessible frontier market, is dealing with its own geopolitical volatility.
“In Vietnam, off-shore territorial conflicts between Beijing and Hanoi, as well as violent popular protests of late sparked by Chinese commercial interests operating in the country, have elevated doubts about the stability of the communist regime,” said S&P Capital IQ.
Policymakers in Vietnam have worked diligently to contain inflation, deal with bad debt and toxic assets in the country’s financial system and make the country more appealing to foreign investors. However, demand for a recent batch of initial public offerings of state-controlled firms was tepid, sending the Market Vectors Vietnam ETF (NYSEArca: VNM) tumbling through April. [Second-Quarter Woes for Vietnam ETF]
As is the case with many frontier markets, Vietnamese equities are not highly correlated to U.S. stocks as highlighted by VNM’s three-year correlation to the S&P 500 of just 0.45, according to Market Vectors data.
VNM has surged 11% since May 8th. Vietnam is currently the eleventh-largest country weight in FM at 1.83%.
iShares MSCI Frontier 100 ETF
