Since last September, when MoneyWeek highlighted its long-term potential, Vietnam's market has soared. A bullish report in February, from Merrill Lynch's chief regional strategist, Spencer White, cited rocketing growth (over 8% last year), a reformist government, burgeoning consumption and forthcoming privatisations as grounds for optimism, concluding Vietnam was a ten-year buy. The Vietnam stock index is currently 95% up on last autumn. With interest mounting, but foreign institutional investors still facing formidable administrative barriers to entry, local investors have been anticipating "a wall of foreign money" pouring into stocks, says Amy Kazmin says in the FT.
But the market now seems set for a rocky ride: valuations look stretched, with p/es around 20, a level generally deemed expensive even for a developed market, and the government is likely to clamp down on margin lending to curb speculation; indeed, the market has fallen fast in the past two weeks. Given all this, White suggests gaining exposure to Vietnam's "dramatic" growth through foreign firms that look well placed to benefit from its long-term development.
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