Asia Frontier Capital reminds investors of Vietnam’s booming economy

By Andrei Skvarsky.

Asia-focused fund manager Asia Frontier Capital (AFC) points out that Vietnam, not the most yearned-for destination for the average investor, has become one of the world’s fastest-growing economies since market reforms opened up the ex-communist country to foreign capital in the late 1980s.

Vietnam’s GDP grew by between 7% and 8% a year throughout the ‘90s and by an average of 5.9% yearly over the past five years.

Having nearly doubled its agricultural production over the past two decades and become one of the world’s largest exporters of rice and shrimp, Vietnam is moving from an economy based on manual labour and agriculture to an economy based on manufacturing and skilled labour, AFC said in its newsletter for April.

In the last five years, agricultural output in Vietnam, which is also a major exporter of coffee and black pepper, has decreased 5% to account for 20% of GDP while the government has begun to provide incentives for hi-tech companies — such as Intel, Canon and Samsung — to bring skilled manufacturing jobs to the country of 90.4m with a literacy rate of 93%, AFC said.

There are two large stock exchanges in Vietnam – the Ho Chi Minh City Stock Exchange (HOSE), the country’s largest, and the Hanoi Stock Exchange (HNX).

HOSE, set up in 2000, currently lists 301 companies. It had a market capitalisation of $44.7bn and recorded a price-earnings ratio of 13.9 as of February 2014. HNX hosts 377 companies and had a market capitalisation of $5.5bn as of February this year.

All the companies listed on the two exchanges are based in Vietnam.

AFC, which has its headquarters in Hong Kong, specialises in investing in high-growth Asian frontier economies. Its geography comprises Bangladesh, Bhutan, Cambodia, Iraq, Laos, Maldives, Mongolia, Myanmar, Nepal, Pakistan, Papua New Guinea, Sri Lanka and Vietnam.

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