Weekly Comment IconSome while back, in July 2016, I wrote a weekly view – “The Rewards of Venturing Off-Piste” – about our enthusiasm for the Vietnamese equity market. This followed our initiation of a small investment within the equity portion of our multi-asset funds. More recently, in February, my UK-based colleague James Sullivan also extolled the country’s virtues in an article for FT Investment Adviser (“The Asean nation aspiring to Emerging Market (EM) status”)

In terms of its economic fundamentals, Vietnam ticks just about every box on a frontier/EM wish list: 6+% GDP growth, healthy Foreign Direct Investment and growing hard currency reserves, hugely favourable population demographics, rapid urbanisation, wage and consumption growth, high employment levels and benign inflation all score big in the game of “investment bingo”.

On paper then, Vietnam looks great. But how does it look on the ground?

Happily, thanks to my daughter’s decision to up sticks from Guernsey, change career, and move to Hanoi to work for a TEFL (teaching English as a foreign language) agency, I have just had the opportunity to find out.

That, in itself, says much about this progressive country and the opportunity it presents. Jamie (yes, I did say daughter – we tease her that we wanted a boy) is just one of many hundreds, perhaps thousands, of ex-pats who are working all over Vietnam as part of a government-driven programme aimed at getting every child of school age speaking English by the next decade. The students in her classes range in age from five to fifteen, and all attend voluntarily (well perhaps with some encouragement from Mum and Dad) outside of regular school hours. Clearly, Vietnam is not content to sit back and wait for things to happen – they are setting the agenda here.

From a visitor’s perspective, any time spent in Vietnam cannot fail to back up the favourable picture painted by the macro data. IT IS BUZZING! One is struck by so many positive things. Firstly, everyone seems so young: 60% of the country’s 95 million population is under the age of 35. Not only that, but judging by the amount of traffic on the streets – admittedly mostly scooters, but new scooters – they all appear to be working, or at least travelling to or from work. Again the stats confirm this; unemployment is just 3%. (As an aside, the traffic is just crazy, with scooters filling every spare foot of space among cars, but despite a total disregard for red lights, yielding to oncoming vehicles or even one-way restrictions, there never seems to be an accident). Of that working population, meanwhile, those involved in customer services are simply excellent – wherever we went, the people could not have been more welcoming or keen to help.

A short road trip between destinations also confirmed that foreign investment is booming, with new-looking manufacturing facilities splashed with the logos of Ford, Canon, Nestlé, Samsung, Toyota, etc., sitting alongside many more with less familiar, local, names. Both in the cities and further out, construction cranes are a major feature of the skyline.

So many other things impress. In contrast to the so-called developed world, there’s free wi-fi everywhere – hotels, restaurants, bars, even in taxis and one town we visited (Hoi An) had its own, full coverage, network. None of that “one free hour or limited megabytes and pay thereafter” nonsense, thank you very much. Indeed communications are as good as, if not better than, anything in the first world – I got a better mobile signal on a boat five miles offshore in the middle of Ha Long Bay than I can get in my back garden at home!

While it has to be said that our holiday covered only a relatively small proportion of the country, and was confined to the major centres/tourist destinations at that, one can be left with little doubt that Vietnam’s growing appeal as an attractive investment market is fully justified. All of this and the food and beer are pretty damn good (avoid the local wine)! What’s not to like?

Frontier Market? Not for long...

 

 

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