Ace, King, Queen Three cards on Vietnam, ahead of next month’s re-rating

We ran a webinar on Vietnam last week for Australian investors. Strong turnout, which tells you something about the growing interest in Vietnam as an investment opportunity.

My mentor Matt Church taught me to lead with my three strongest cards. So here are mine on Vietnam.

The Ace is the date. Vietnam moves into FTSE 'Emerging Market' status on 21 September, with MSCI expected to follow. James Dunn covered it in Inside Adviser last month and put the potential foreign inflow at up to US$6 billion, arriving in a market worth around US$300 billion after four years of foreign selling.

The King is the price. Mario Timpanaro has run the Lumen Vietnam Fund since 2012, and he points out that the market excluding Vingroup trades at 12.5 times earnings while growing earnings at 15 to 16%, and closer to 11 times on next year's numbers. You don't see that combination very often.

The Queen is the correlation. Vietnam runs at about 0.3 against the S&P and MSCI World. Australian portfolios are generally overweight Australia and the US, and those two move together. Vietnam doesn't move with either. Worth considering for anyone thinking about diversification in these volatile times.

Three cards. Date, price, correlation.

Vietnam has of course been a good story for a decade. What's different this year is the re-rating that starts next month, and the money that comes with it. How does it stack up against your cards?

PS Nga Nguyen heads portfolio advisory for the fund and she'll be in Australia with me in late September. I'll be organising Vietnam briefings during this period so please message me if you'd be interested in attending to learn more.