Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
An account already exists for this email address, please log in.
Vietnam: winning Trump’s trade war
There’s been one clear winner in the US-China trade war so far – Vietnam. Many investors see it as the developing world’s next big thing.
There's been one clear winner in the US-China trade war so far, says Chris Matthews on MarketWatch Vietnam. The Southeast Asian country has become "a popular destination for new manufacturing investments as multinational firms seek to reorganise their supply chains to avoid US tariffs on Chinese exports".
Labour costs in Vietnam are still low compared with China, while business is considerably easier compared with other low-cost locations, such as India. This meant that the country was already attracting manufacturers, but the trade dispute has accelerated the process. And even if China and the US come to an accord, the trend is unlikely to reverse.
"A lot of US companies will be thinking very hard about their supply chain and they want to reduce their dependence on China," Laurent Saltiel of AllianceBernstein, a fund manager, tells MarketWatch. "It's too risky to be exposed to just one country."
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
The results are already showing up in the trade data, adds the Financial Times. "Export growth has collapsed across Asia this year," but "Vietnam is an exception." Shipments of goods such as phones, computers and electronics have all continued to record strong increases. Exports to the US Vietnam's number-one trading partner have outperformed: its trade surplus with America is on track to reach $50bn this year not a trivial amount for a $240bn economy.
These figures have already caught the eye of Donald Trump: back in June, he berated the country for treating the US "even worse' than China on trade" and imposed huge tariffs on steel imports. But Vietnam quickly responded by pledging to buy more from the US in the hope of tempering Trump's wrath.
Officials reiterated that commitment again last month, including a plan for a $5bn liquefied natural gas terminal and power plant that would increase imports from America while helping to meet Vietnam's rising demand for energy.
The next big thing
It remains to be seen how much Vietnam will really benefit from US-China tensions but many investors see it as the developing world's next big thing anyway, says Tom Stevenson in The Daily Telegraph. Growth is solid, debt and inflation are under control and the currency is stable. The population of 95 million people is young (half are working age, two-thirds under 35), educated and ambitious. Infrastructure is poor, but improving fast.
"The country has more going for it than any emerging market in Asia or anywhere else," says Stevenson. MoneyWeek agrees. We suggest looking at Vietnam Enterprise Investments (LSE: VEIL), currently on a discount to net asset value of 11%.
Sign up for MoneyWeek's newsletters
Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Cris Sholto Heaton is the contributing editor for MoneyWeek.
He is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is experienced in covering international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers.
He often writes about Asian equities, international income and global asset allocation.
