Rising labor market participation, a pickup in client demand and financial progress are among the many the reason why rising markets have been within the highlight this yr. Rising markets on the MSCI checklist embrace Brazil, China, Greece, India, Indonesia, South Korea, Malaysia, Mexico, the Philippines, Qatar and Thailand. One fund supervisor, nevertheless, is trying outdoors that checklist, at an “up and coming rising market and the following dragon in Asia” — Vietnam. “It is in a candy spot by way of financial progress, urbanization, labor market participation and having the appropriate authorities coverage. The market can be very low cost,” Shasha Li Mafli mentioned. The senior fund supervisor at Eric Sturdza Investments manages the $83 million Strategic Vietnam Prosperity Fund which seeks long-term capital progress by way of investments in Vietnamese structural progress themes. Chatting with CNBC Professional final month, Mafli — who focuses on investing in Asian shares — drew parallels between Vietnam’s present financial system and China’s 15 years in the past. Similarities embrace the energy of their manufacturing sectors, a rising middle-income class, younger inhabitants, stage of infrastructure improvement and energy in overseas direct funding flows, she mentioned. “Vietnam has been fairly profitable within the final 10/15 years and is now positioned for important progress from present ranges. Its GDP per capita is about $4,000 in the present day is prone to attain $10,000 – the place China is in the present day – over the following few years,” Mafli mentioned. Acknowledging that each nations differ in dimension and scale, the fund supervisor mentioned the similarity of their financial constructions supplies perception into Vietnam’s potential trajectory. The Southeast Asian nation’s financial system grew by 6.42% within the first six months of the yr from 3.84% the yr earlier than, whereas FDI inflows surged 13.1% to $15.19 billion, information from its Common Statistics Workplace revealed . Forecasts from the Worldwide Financial Fund put the nation’s full-year 2024 progress fee at 6.1% . Regardless of its robust progress, Vietnam continues to be not a part of the MSCI Rising Markets Index. Mafli expects this to vary within the subsequent yr or two — with the nation being added first to the FTSE Rising Asia Pacific Index and FTSE Rising Markets Index subsequent yr, and the MSCI Rising Markets Index quickly after. A ‘huge theme’ Mafli is betting on “excessive progress sectors” and shares “doing properly in underperforming sectors.” One theme she watching is consumption, given the surge in Vietnam’s middle- to higher-income inhabitants, she mentioned. “That is the large theme I play in Vietnam as a result of it’s going to profit so many sectors like retail and proceed to drive Vietnam’s progress within the subsequent 5/10 years,” Mafli added. Shares she’s betting on within the theme embrace electronics retailer Cellular World Funding, which she describes as a “very profitable enterprise.” “This is without doubt one of the finest corporations by way of progress and administration high quality,” she mentioned. Shares in Cellular World are up almost 55% year-to-date. Of 12 analysts protecting the inventory, 11 give it a purchase or obese score and one has a maintain name, in response to FactSet information. The inventory’s common value goal of 74,473.80 Vietnamese dong ($3.01) provides it upside potential of 12.3%. Infrastructure play One other space on Mafli’s radar is infrastructure, given developments in sectors like logistics, power and utilities. She famous that power infrastructure — which incorporates tasks in oil and gasoline or wind installations— have been weak within the final decade, and can seemingly be ramped up. She mentioned she’s enjoying the theme with PetroVietnam Technical following its acceleration in oil and gasoline tasks and progress in wind set up and inexperienced power. Shares within the inventory are up almost 9.5% year-to-date. All six analysts protecting PetroVietnam have an obese or purchase score at a mean value goal of 49,411.20 Vietnamese dong, in response to FactSet information. This offers the inventory 18.5% upside potential. ‘Very undervalued’ sector Mafli additionally likes actual property, a sector she considers “very undervalued particularly during the last two years.” Vietnam’s actual property market was in a disaster in 2023 , following declines in provide and liquidity. Nevertheless it has been exhibiting indicators of restoration since late final yr, with authorities assist and the reopening of tasks. Vietnam’s property market troubles differ from China’s in that the nation continues to be within the early phases of progress and isn’t going through problems with oversupply, Mafli defined. She expects the nation’s speedy urbanization to extend demand for residential, industrial and industrial properties within the subsequent decade.
