Vietnam offers tremendous investment opportunities: VinaCapital
Consumer goods, health care, energy, construction materials, infrastructure, and technology are among the sectors with enormous potential for investment in Vietnam once the COVID-19 pandemic subsides, an expert has said.
The consumer goods sector is among the most promising for investment in Vietnam
Don Lam, co-founder and CEO of fund management company VinaCapital, recentlyspoke to a group of Republic of Korean investors through video conferencing about Vietnam’sefforts to manage the outbreak, how the pandemic would affect the economy andinvestment opportunities now and post-pandemic.
“We have always preferred those sectors that are benefiting from Vietnam’s domesticconsumption, which is driven by several factors including urbanisation, youngdemographics, better jobs and high incomes, and a growing middle class.”
The consumer discretionary sector had traditionally seen the highest growthsince people with more money in their wallet spend it on dining out, consumerelectronics, jewellery, and others, he said.
“Although there is a short-term hit from the outbreak, we can continue toexpect the sector to resume strong growth.”
Health care is another sector benefiting from the growing middle class sincethe public health care system is expanding yet overburdened.
Private health care is expanding, enabling some people who previously wouldhave gone to Bangkok or Singapore for treatment to get it at home today,according to Lam.
Energy is another promising sector, with demand outstripping supply, requiringthe country to import from neighbouring countries.
"LNG and renewables are the future," he said.
Domestic manufacturing, with companies that are involved in infrastructure orcatering to the needs or desires of the growing middle class, is also aninteresting sector as is technology, according to Lam.
Vietnam has been going through a tech boom in the past few years, withstart-ups working in a wide range of areas like fintech, AI, real estatetechnology, and logistics.
“Tourism will definitely make a comeback in 2021,” he said.
Vietnam could benefit enormously as it is seen as a safe haven amid theoutbreak and offers great value for money in addition to its beautiful sceneryand rich culture, he said.
Of course the recovery time depends on the global economic condition,transportation options and the medical situation, but now is a good time toinvest in the sector, according to Lam.
The stock market is also an option since its valuation has declined by 30-40percent during the outbreak, and many stocks are now attractive.
It now trades at a P/E of 10.3, the cheapest since 2012 and the lowest in theregion.
But he also shared notes of caution about investing in Vietnam, saying thereare some risks just like in any other frontier and emerging market.
"To mitigate the risks and prepare for the best possible outcomes,investors need to take a long-term view, do thorough due diligence, fullyunderstand the market, and have a trusted local partner," he said.
"The days of 'fast money' are over and patience is important whenoperating in Vietnam," he warned.
"One of the biggest mistakes foreign investors make is that they assumeall of Southeast Asia is the same, but Vietnam is not the same as Thailand,Indonesia or Malaysia, and each country has its own development strategies andown way of working," he said.
Successful foreign investors would be those who tailor their products, servicesand workplaces to Vietnam.
The global economic recovery would take time, but Vietnam was well-positionedto rebound once the COVID-19 outbreak is under control, with revised forecastsstill ranking Vietnam among the fastest growing economies in the world, headded.
“The opportunity here is virtually endless.”/.VNA