Vietnam’s internal party election is underway with plans to promote economic growth, bolstering the country-specific exchange traded fund and lifting the emerging market benchmark to its largest single-day surge in almost four years.
While the broader emerging markets were lower along with global markets on increased economic uncertainty and the slide in oil prices, the Market Vectors Vietnam ETF (NYSEArca: VNM) gained 4.0% Monday. Vietnam’s VN Index increased 3.9% Monday, its strongest single-day jump since March 2012, according to Reuters.
“The fact that congress is taking place smoothly boosted the
positive sentiment of the market,” Ha Le, analyst at
Vietcombank Securities, told Reuters.
On Tuesday, delegates will be presented with 222 candidates in an election for the 180-member Central Committee, who will elect at least 16 members of the Politburo, which handles daily governance of Vietnam, ABC News reports.
While Vietnam is a communist country, the government has steered toward a quasi-free market economy that is strictly controlled by the state.
For instance, the government is setting a stronger tone to support private businesses over the next five years, Bloomberg reports. Vietnam’s 2016 to 2020 economic blueprint will create “favorable conditions” to support private companies.
The “private sector is an important engine of the economy” and urged for policies to support it, General Secretary Nguyen Phu Trong said in an opening address last week.
The greater freedom for private business may also be supporting banks and the financial sector, with five of the country’s six listed lenders outperforming the broader Vietnamese benchmark Monday. VNM’s portfolio also includes a 46.2% tilt toward the financial sector.
The party congress is also expected to set an outline for economic reforms and growth. For example, the proposed socioeconomic plan through 2020 show economic growth could expand as much as an average 7% annually, with gross domestic product per capita of $3,200 to $3,500 by 2020, compared to current International Monetary Fund’s estimates of about $2,170.
The IMF argues that Vietnam could be one of the fastest growing economies int eh Asia-Pacific region if the government can hit the goals.
Market Vectors Vietnam ETF
Max Chen contributed to this article.