Looking for long-term opportunities in emerging markets (EM) may be a losing bet, but for long-term growth, there are opportunities to be found in countries like Vietnam.
Rising interest rates and a strong dollar have dented EM opportunities for years, leaving investors wondering if the pain will end soon. With so much uncertainty remaining in the current market, investors don’t want to catch the proverbial falling knife when trying to pick up the floor.
As such, a better option is to view EM with a longer lens. At some point, the US Federal Reserve will have to pump the brakes on higher rates, which will reduce the dollar’s decline and thus strengthen EM currencies.
Meanwhile, investors can focus on Vietnam, which has been showing improvement of late. The recent increase in COVID cases may have dampened economic growth prospects, but a strong recovery could make up for lost time and productivity.
“Lenders HSBC have raised Vietnam’s growth forecast to 7.6% this year due to the country’s recovery and significant improvements in the manufacturing sector,” the VN Express report said.
Manufacturing plays an important role in Vietnam’s economy, and it looks good recently. Disruption to supply chains in the wake of increasing COVID cases appears to be easing.
“Vietnam’s manufacturing sector has been doing very well, following the ASEAN reforms, reflecting a strong improvement in the health of the manufacturing industry,” HSBC Vietnam Director Tim Evans said at a press conference on Tuesday.
With this in mind, Exchange Traded Fund (ETF) investors can look at Global X MSCI Vietnam ETF stock price history if possible. VNAM aims to provide financial results that are comparable to the MSCI Vietnam IMI Select 25/50 Index, which it was designed to represent Vietnam’s working environment while including at least a minority constituents, as defined by MSCI, Inc.
Inflation remains a concern
It’s hard to discuss anything related to capital markets without running away from the topic of inflation. Rising consumer prices continue to be a trump card, and Vietnam’s economy is immune to inflation.
“The economy has faced serious problems. Slowing demand for foreign goods and tightening global financial conditions are affecting the exchange rate. Rising inflation and tightening of domestic monetary conditions may weigh on domestic demand in the coming months,” the World Bank said.
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