International Investing

An article in the New York Times today highlights the opportunity available:

It has Asia’s second-fastest-growing economy, with 8.4 percent growth last year, trailing only China’s, and the pace of exports to the United States is rising faster than even China’s.

But US corporate handouts could take some of the momentum out of the Vietnam economy:

But with such growth has come controversy, here and in the United States. Republicans in Congress are divided over a coming vote soon after the midterm elections: Should the United States grant permanent, full trade relations to Vietnam, given the two countries’ history and Vietnam’s current position, where it sells almost nine times as much to Americans as it buys?

Permanent unrestricted trade would benefit both the US and Vietnam, unfortunately protectionism may come into play. Hopefully not, since the region eventually can be a large market for the US:

Vietnam has reduced the percentage of its people living in abject poverty — less than $1 a day — to 8 percent from 51 percent in 1990, a greater advance than either China or India.

Free markets work! Years of communism and starvation have made the country wary of state control that could hinder growth. For investors the stock market in Vietnam is illiquid but investors can get exposure to the region through Matthews Pacific Tiger - MAPTX fund or through BusinessWeeks suggestion:

…the best way to gain Vietnam exposure might be through buying listed closed-end funds. These typically invest in both listed and over-the-counter Vietnamese stocks, a potentially large pool of some 2,400 companies. There are about a dozen closed-end Vietnam funds, most of them listed in London or Dublin. The largest is Vietnam Enterprise Investment Fund, managed by Dragon Capital since 1995, with a net-asset value of more than $350 million. Saigon-based Dragon also manages the $192 million Vietnam Growth Fund.

The $230 million Vietnam Opportunity Fund is managed by VinaCapital and is listed on London’s AIM board. It currently trades at a more than 30% premium to net-asset value. Other Dublin-traded funds include PXP Vietnam Fund, and PXP Vietnam Emerging Equity Fund. Prudential says it plans to begin raising between $150 million and $200 million for an offshore Vietnam fund, pending Vietnamese regulatory approval expected within a few months.