Investors searching for value opportunities among international equities and the related exchange traded funds have plenty of options to consider.
Along with offering deeply discounted stocks, some countries offer notable growth opportunities. Vietnam is one such example, indicating that the VanEck Vietnam ETF (VNM) is a worthy consideration for tactical investors.
There’s an overt value case for VNM because Vietnamese stocks are as cheap as they’ve been in a decade.
“The Vietnam Stock Index has fallen more than 27% this year as concerns grow over rising interest rates. The gauge now trades at about 9 times estimated earnings over the next year, its lowest since 2012, prompting firms such as Coeli Asset Management SA to increase their positions in Vietnam,” reported Nguyen Kieu Giang for Bloomberg.
Coeli Asset fund manager James Bannan told Bloomberg that plenty of high quality Vietnamese stocks are on sale, which could bode well for VNM. Vietnam’s market designation is the frontier classification — a label that gives some investors pause. However, the Southeast Asian economy is rapidly growing, and its equity markets arguably offer more quality than meets the eye.
The $323.3 million VNM tracks the MVIS Vietnam Index and holds 59 stocks. About 30% of the fund’s holdings are real estate stocks, and that is one of the groups viewed as inexpensive in Vietnam at the moment.
“Vietnam stocks are ripe for a short-term rebound after a selloff that started in late August. Even so, investors will keep a close eye on the market ‘to see if the bear is still strong or if we are reaching the bottom,” said Quynh Cao, director of institutional sales at SSI Securities Corp., in an interview with Bloomberg.
VNM is also highly in tune with Vietnam’s rising consumer story, as the consumer staples and consumer discretionary sectors combine for nearly 30% of the fund’s roster. Those sector exposures position VNM to capitalize on Vietnam’s rising middle class, which is a longer-ranging concept. Speaking of the long term, that’s likely the best way for investors to approach VNM.
“Investors said Vietnam’s long-term story remains intact due to its stronger macroeconomic position relative to regional peers. The country, whose economy is expected to grow about 7% this year, is also a prime beneficiary of supply chain shifts,” according to Bloomberg.
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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.
