I’ve heard a lot of hype about Vietnam. It’s one of the fastest growing economies in Southeast Asia and one of the best emerging countries in the world.

So, like anything, I went to go and check it out and see it for myself.

I spent two months with my family traveling the country. One month in the south in Ho Chi Minh City (Saigon) and one month around the north, in Hanoi, the capital of Vietnam. This is a really brief summary of my experience.

🚶 We averaged 10km walks a day… a DAY… and my Fitbit said I covered 987km in walking in that two-month period! We covered a lot of ground.

🍜 We ate more Banh Mi (Delicious Vietnamese Rolls) and Pho (Noodle Soup) than any tourist alive (I don’t know, it felt like a lot).

It was a full-on experience, to say the least. I’ll try to keep my personal views aside. While Vietnam was an amazing country with great food and a rich culture, I personally wouldn’t live there. I’ve lived in a few places and spent the last 10 years going back and forth to India. While I liked Vietnam, with a family, I don’t think it would suit us long term.

It certainly lived up to the hype. There were amazing apartment complexes, new developments everywhere, infrastructure across the city is underway, and there are some fantastic malls and retail complexes.

Hanoi was a lot more traditional and felt like an old charming town. Saigon was a lot more cosmopolitan, modern, and most certainly more evident of extravagant lifestyles. There was a lot more hustle and bustle in the South, endless traffic, everyone doing something.

💥 We had a blast.

I was fascinated by the economic opportunities and advancements in different industries and areas. The overall improvement in lifestyle, urban modernisation, and the growing middle class have created a significant demand for a better quality of life.

💎 The presence of expansive malls, luxury brands, numerous Maybachs and sports cars, as well as high-end restaurants, bars, and hospitality establishments, was quite evident.

I had the opportunity to explore various cities, remote areas, and a few villages. This provided me with a comprehensive view of the entire country. As the country flourishes and the middle class expands, this tends to carry a lot of forward momentum.

I have not witnessed another country that has experienced such rapid and extensive growth. It was truly remarkable to see this transformation unfold.

🛵 GRAB Holdings, the well-known SPAC company listed on NASDAQ as GRAB, is everywhere. The city is filled with an army of green scooters, cars, helmets, and drivers in green blazers—everywhere. We used their services two to three times a day. While it’s not listed locally, there was a strong presence throughout Vietnam. Shows the demand for these types of services…(I have no holding in GRAB, great business, terrible stock).

The booming economy, widespread tourism, presence of multinational companies, and expat communities made it seem like certain districts were part of Europe or a Western country. We found everything we needed, and the cost of living was incredibly affordable. It also offered extravagant options for those willing to splurge – a perfect balance that suited my preferences.

It was a place where one could save money in one moment and then freely indulge in excess just across the street.

📈 The Growth of Vietnam and the economy.

Vietnam is the 3rd largest economy in Southeast Asia. Vietnam ranks around the 35th largest economy in the world with a GDP of US$430 billion. The country is expected to rise in the global economy rankings, with projections indicating it will surpass other ASEAN economies to become the 21st largest economy in the world by 2038 and a high-income economy by 2045.

As income opportunities increase and the middle class grows, this fuels spending and the desire for an improved lifestyle. Whether it’s buying property, a car, a scooter, better food, meat, fresh vegetables and fruit, or medical needs, all these activities and demands drive the overall economy.

What’s good for the economy is great for investment, attracting investors, fueling growth in public markets creating a prosperous economic cycle.

Emerging markets have shown impressive GDP growth rates, and the exchanges as a whole have experienced significant growth. The government has relaxed many foreign direct investment laws, leading to an influx of overseas investors into the market, particularly in real estate. As a real estate investor myself, I saw a lot of opportunities in this market.

✅ Overall, Vietnam’s economy deserves a giant A+ from me.

Vietnam offers fantastic properties, with many multinationals and locals seeking high-end properties. There is an established Airbnb market and attractive yields. Having spent two months in Vietnam, the growth is palpable, you can feel it. For those who have not been entrepreneurial, done business overseas, invested abroad, or travelled internationally, it might be hard to understand the extent of this growth.

However, the economy’s growth is evident everywhere. Every corner is filled with small and large businesses, and eateries, cafes, and bars are buzzing at all hours. Malls, shopping centres, local food markets, wet markets, and shopping districts are bustling with business. Modern cars, charging stations, brands, and fashionable clothes are omnipresent.

Even in less developed areas, the development and infrastructure expansion continue to make a mark. After researching Vietnam, analysing the economy, and grasping the market, it clearly mirrored what I had learned prior to arriving.

🫰 Do the locals invest?

The real estate market is thriving, and both exports and imports are growing. The hospitality and tourism industries are also booming. As the economy grows this will continue to attract locals to public equites as a means of wealth creation.

I’m not sure how accustomed Vietnamese people are to investing in public equities. Real estate, business, and gold seem to be the most popular sources of wealth, while local business also draws significant interest.

I would be interested in seeing some statistics on ownership and the number of retail investors and individual investors who participate in the markets. During my two months here, I didn’t meet too many people or locals who seemed interested in equities. However, I did encounter some dedicated investing enthusiasts.

Vietnam has a well-structured financial and investment banking sector, and with a US$190 billion equities market, it’s certainly not insignificant.

📊 Down to business and the Vietnam Stock Exchange…

The Vietnam Stock Exchange (VNX) is a unified stock exchange in Vietnam. There are two separate exchanges: the Ho Chi Minh City Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX). The VNX was established in 2000 with the goal of creating a single, unified market for trading securities in Vietnam.

The VNX has several stock indices, including:

• VN-Index: A capitalisation-weighted index of all listed companies on the HOSE.
• HNX-Index: A capitalisation-weighted index of all listed companies on the HNX.
• FTSE Vietnam Index: A market-capitalisation-weighted index of large- and mid-cap stocks listed on the VNX.
• VNX30: A market-capitalisation-weighted index of the 30 largest and most liquid stocks listed on the VNX.

Listed Companies: Around 750 Companies.

• Banks: Vietcombank, VietinBank, Techcombank, and others.
• Conglomerates: Vingroup, FPT Corporation, and others.
• Real Estate: Vinhomes, Novaland, and others.
• Industrials: PetroVietnam, Vinamilk, and others.
• Consumer Goods: Masan Group, FrieslandCampina Vietnam, and others.

Yes, a lot of companies have Vin or Viet in the name. It is everywhere.

Market Statistics: As of August 2024:

• Market capitalisation: Over VND 4,500 trillion (approximately USD 190 billion).
• Trading volume: Average daily trading value of over VND 20 trillion (approximately USD 850 million).
• Number of trades: Over 1.5 million trades per day.

It’s not exactly small…

The VNX is regulated by the State Securities Commission of Vietnam (SSC) and the Vietnam Securities Depository (VSD). The SSC sets rules and guidelines for the stock market, while the VSD operates the central securities depository and settlement system.

The VNX operates from 9:00 AM to 3:00 PM local time, Monday to Friday. The official language of the VNX is Vietnamese, but English is also widely used in financial reporting and communications.

👏 That’s great Mitch thanks for the “Google Searched” summary…

The bigger question is how to trade and make money there? I don’t know, thanks for reading. The End.

No but seriously, there is money to be made, but it isn’t exactly easy. Tread with caution. Nothing against any country at all, but it’s another world entirely.

I recently visited some stock exchanges to explore potential investment opportunities in emerging markets, particularly in Southeast Asian public equities. While the Singapore Stock Exchange and the Bursa Malaysia (Malaysian Stock Exchange) are well-established and reputable, some other Southeast Asian countries have shown significant development over the last 1 to 2 decades.

However, these markets are not easily accessible and pose challenges for everyday investors who are not local or familiar with how things work.

These markets may not be suitable for novice investors or even some experienced ones due to concerns such as fraud, reporting, and access to public information. Insider trading, which is a significant issue in other developed countries, is quite common in these smaller, newer exchanges and carried out often.

My primary concern is the accessibility to information, especially if you are not there and playing in real time. This makes it challenging to execute long or short strategies based on publicly available information, as it may not provide a complete picture.

The accounting standards used are Vietnam Accounting Standards (VAS). Understanding the differences and how they differ from what we may expect in other exchanges is another big risk.

To me, this is where valuation can be entirely different. It is common to create a separate discounted cash flow (DCF) or modelled financial analysis country by country to take into account the nuances of differences in these accounting standards.

👣 Tread slowly…even more so in foreign lands.

As a global investor, I am open to investing anywhere and in anything, with a focus on micro-cap and small-caps. This requires conducting extensive due diligence, which is more qualitative in nature.

I pay attention to the backgrounds of the people managing these companies, their connections, their motives, and their relationships with entities such as governments and high-net-worth individuals who hold significant influence in these countries.

There is a lot more scrutiny on who is carrying out the audits and how they rank among the corporate financial world within Vietnam.

Investing in these markets involves more than meets the eye, and maintaining vigilance is crucial. These markets offer substantial potential gains, as many of the companies are undervalued for what they truly represent.

One reason for this undervaluation is the complexity of market entry, which makes it challenging for Western fund managers to access these markets. Institutional ownership is not as prevalent in these markets, with a lot of companies being founder or family-owned, especially in the lower end of the market.

I have also found many companies that were great businesses, with healthy margins, but they were so tightly held with a limited float that the companies don’t move. They are usually dividend-paying companies, giving the owners strong income streams.

For me, I think for an investor sitting abroad, trying to sift through the various listed companies, then reading and interpreting the financial statements and understanding the business and how impactful it is on the ground is very hard to do.

There may be lower-lying fruit in other regions to choose from 🍎

As seasoned investors all know, there are only three real edges in this game: informational, analytical, and behavioural. I think none of these apply to most people looking at Vietnam from afar. You won’t have any informational and analytical edge over local or SE Asian investors…these investors whom I have engaged with are very talented…they know the numbers, and they analyse in completely different ways.

I am not trying to discourage anyone from investing in Vietnam but painting a realistic picture. If you are serious (I’m not talking about local investors or those in the Southeast), then there is no doubt opportunity.

However, to most retail private investors in the West, Europe, and other parts of APAC regions, it is not something I’d recommend unless you had a real plan or a specific company came across your path.

It is not the place to create a hunting ground.

💬 The language Barrier…

During my extensive travels, I encountered significant challenges due to the language barrier. Navigating through the websites and products of smaller companies proved to be incredibly difficult, as English was a rarity.

Spending eight weeks in various cities and towns, I found it rare to converse in English or even read it, hampering my ability to comprehend reports and financials.

Connecting with larger companies might be more accessible, but the same level of engagement as with micro-cap and small-cap boards may not be feasible. This language barrier poses a significant hurdle for those who, like me, prefer to establish direct connections and engage with companies on a personal level.

If you are accustomed to transparency, clear websites, and consistent branding and social media profiles of companies and public profiles of executives, you won’t find the same level of openness or public image in emerging markets and their exchanges.

This emphasis on image and shareholder relations is more common in established countries and their public companies. It’s not necessarily a negative thing; people in these places are accustomed to it and consider it normal.

For example, companies in countries like Vietnam simply focus on doing business without prioritising the same level of image that we might expect.

In these places, it’s typical not to find comprehensive websites, public profiles, or executive profiles, so there’s no need to panic and wonder about their intentions.

When doing business in countries like India, this lack of transparency is similarly common and expected. In developed countries, the absence of a website might lead to suspicions about the legitimacy of a company, but this isn’t necessarily accurate. It’s important to challenge our own assumptions and understand that different countries have varying norms and practices in the business world.

🔍 What am I looking at?

Despite the challenges, I see potential in traditional and sometimes less exciting businesses that provide much-needed products and services to a growing country.

Industries like industrials, materials, consumer discretionary, telecommunications, media, construction, and engineering are thriving in these markets. Unlike developed countries that have shifted towards technology, emerging markets are still catching up, making these industries promising for long-term growth.

I’m particularly interested in seemingly boring companies that supply essentials like cement to the construction sector. Despite being cyclical in developed countries, these products are in high demand in rapidly growing markets. Emerging markets are also seeing substantial infrastructure development, including technology upgrades, roads, and electrical infrastructure.

Unfortunately, many emerging market exchanges have limited tech listings, as tech and digital companies often move to larger markets like Hong Kong or Singapore for scaling and access to capital.

For those interested in entering markets like Vietnam, an ETF specific to that country or a broader Emerging Markets ETF may be a suitable option.

Personally, I’m looking to select quality smaller companies with strong management that align with long-term growth themes (specific to that region), knowing that thorough research and possibly site visits will be essential for success.

🤔 These are just my musings of the trip and what I have been looking at.

🇮🇳 I am currently back in India, exploring potential opportunities and indulging in a lot of Biryani. The Indian equities market has experienced a significant boom for the past decade. India has approximately 6,800 publicly listed companies spread across the two major stock exchanges – the NSE (National Stock Exchange) and the BSE (Bombay Stock Exchange). With a market capitalization of US$4.33 trillion, India holds the position of having the 4th largest stock market in the world, indicating ample opportunities for investment…a blog for another time.