Vietnam - A Rising Star in the Making as an Emerging Market

A recent article published on the UK-based news website, portfolio-adviser.com, has highlighted the growing expectation that Vietnam will be upgraded from a frontier-market to an emerging-market status. The country has been experiencing consistently high GDP growth for many years, thanks to a combination of political stability and sound pro-market execution by the government.

Poverty has been significantly reduced from 17% to less than 5% within a decade. The article also notes that Vietnam’s foreign direct investment (FDI) has increased due to the “China Plus One” phenomenon, which has led to a surge in exports. Despite the pandemic, the country has signed more than a dozen key trade agreements, positioning itself as a manufacturing expert with access to international markets. Vietnam has also been moving towards manufacturing higher-value products in electronics rather than textiles.

Samsung Electronics is one of the country’s most critical sources of FDI, employing tens of thousands of people and being the largest investor in the country. The article suggests that Vietnam is now eligible to be included in the emerging-market index by MSCI, as the stock market meets the size and liquidity requirements and has seen a four-fold surge in retail participation over the past few years.