Use the VNM ETF to Play a 2021 Rebound in Vietnam’s Economy

For ETF investors looking for brighter days in 2021 and simultaneous international exposure, it might be best to look at countries that are poised for a strong rebound. When it comes to opportunities in Southeast Asia, Vietnam is one country that deserves a closer look.

Per a VNExpress International report, “Vietnam’s GDP will grow by 2.8 and 7.1 percent in 2020 and 2021, United Overseas Bank has forecast. With the country managing to contain the second wave of the novel coronavirus in July and August, its GDP growth is set to recover from 2.6 percent in Q3 to 4 percent in Q4, the Singaporean lender said in a recent report.”

“We still expect the recovery to extend further in the last quarter but the pace is likely to be restrained against a backdrop of ongoing global Covid-19 pandemic.”

Additionally, the “rebound in manufacturing sector and consumption remains weak so far and border closures have reduced tourist arrivals to a trickle, it said. In the first nine months manufacturing growth fell to a decade low of 4.6 percent, while foreign tourist arrivals were nearly 71 percent down, according to the General Statistics Office.”

“While the worst of the impact from Covid-19 pandemic looks to be over, it is still a long way before Vietnam’s economy could return to its full capacity,” the report said.

ETF investors who want to get overseas exposure to Vietnam can do so via the VanEck Vectors Vietnam ETF (NYSEArca: VNM). VNM seeks to replicate as closely as possible the price and yield performance of the MVIS® Vietnam Index. A company is generally considered to be a Vietnamese company if it is incorporated in Vietnam or is incorporated outside of Vietnam but has at least 50% of its revenues/related assets in Vietnam.

VNM offers investors:

  • The Nation’s First ETF Focused Exclusively on Vietnam: Among the world’s most populous nations; roughly 40% of the population is under the age of 25
  • One-Trade Access to Local Market: Approximately 70% of Index market cap currently represents locally-listed Vietnamese companies
  • Convenient Way to Customize International Exposure: Companies must be incorporated in, or derive at least 50% of total revenues from Vietnam to be added to the index

VNM Chart

ETF investors looking for broader exposure to Southeast Asia can look to funds like the Global X Funds – Global X FTSE Southeast Asia ETF (ASEA). The Global X FTSE Southeast Asia ETF (ASEA) provides investors with broad exposure to the Southeast Asia region, comprised of Singapore, Malaysia, Indonesia, Thailand and the Philippines by tracking the FTSE/ASEAN 40 Index.

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