There’s still a lot of confusion about the direction of the stock markets. But one major trend you can count on is the growth of the new consumer class in emerging markets – an opportunity I’ve commented on before. The best place for this trend is Asia. And Vietnam is a great new way to play this trend. It’s like investing in China 10 years ago when the growth still hadn’t been fully priced in. Think about these facts, which will put more money into the pockets of Vietnamese consumers and push the economy higher:
§ Infrastructure is still in the early stages in Vietnam. Once the upgrades are done, growth will explode, just as in China.
§ A huge migration to the big cities, much like China.
§ More than 50% of Vietnam’s 86 million people are younger than 25.
§ Vietnam’s 94% literacy rate is one of the highest in SE Asia. High education will attract investment.
Low-cost labor vs. China will accelerate Vietnam’s growth
Another powerful factor that will drive even more positive growth is Vietnam’s low-cost labor relative to China’s rising labor costs. Chinese salaries are up 20+% in 2010, compared to an average 13% increase over the last 3 years. This growth is projected to continue for at least 5 years. Lots of Chinese factories are moving their operations to Vietnam.
Sure, Vietnam has problems like a high budget deficit and high rates of inflation. But it’s still on track to grow 3 times the rate of the U.S. economy this year. Along with Singapore, Malaysia and Indonesia, Vietnam has big advantages over its large economic neighbors, India and China.
Watch out for my investment ideas for Vietnam
I’ve mentioned Vietnam’s potential before. I will report back when I come up with some good new investment ideas for Vietnam. In the meantime, do your own research and keep Vietnam on your radar when looking at emerging markets.