Vietnam,the emerging market ETFs

The thought of Vietnam brings up visuals of military carnage as seen on the nightly news of the 1960's. This is what Vietnam looks like today.

Yet, this small Southeast Asian country is still at war - with inflation. Nearing 20 percent, inflation crushed the Vietnamese economy in 2011. The Vietnamese government has recently taken strong and decisive action to curb inflation and return Vietnam to its previous prosperity.

Vietnam falls into the Emerging Markets sector. Two of the largest emerging market's ETF's Vanguard's (NYSEArca:VWO) and iShares (NYSEArca:EEM) do not list Vietnam among their top 10 holdings geographically. [Related: WisdomTree Emerging Market Small Cap ETF (NYSEArca:DGS), WisdomTree Emerging Markets ETF (NYSEArca:DEM)]

I have not found any Vietnamese stocks listed on the NYSE.

Market Vectors Vietnam ETF (NYSEArca:VNM) is the best way for investors to gain exposure to this truly emerging market.

VNM's holding are weighted in financials at 42.5 percent. Energy comprises 26.5 percent of this ETF with industrials 12 percent, materials 7.7 percent and consumer goods 9 percent. Although financials dominate, this is a diversified ETF and typical composition of an individual country index.

Average volume of 138K shares daily would not be considered heavy volume, but it is by no means illiquid or 'thinly traded'. What's important in the table is relative volume has traded at 2.4x the norm. Somebody is showing a lot of interest in Vietnam - rightly so. With 40 percent off the highs, VNM has a lot of room to move.

The Money Flow Index shows that buyers have come in strong after the December lows. Even more encouraging, the price has broken out of the descending wedge pattern and has made a higher high for the first time on the chart. The +/- Directional Index confirms that the bulls have made a decisive break out.

To test this price action as a true trend reversal, we need to see a pullback and support built. A pullback to $16 (the higher high breakout point) and recovery would be an ideal indication of a turnaround in Vietnam.

Catching a bounce at $16 to ride VNM up to its May 2011 highs would be nearly a 50 percent gain. Not bad for a "war torn" nation.

Under the World Trade Organisation (WTO)'s commitments, in 2012, Vietnam will allow securities companies and 100 percent foreign-invested fund management companies to operate in Vietnam.The first open-ended fund product with scale of 200-500 billion dong will be launched somewhere mid of 2012.

With its extremely cheap stocks on offer, Vietnam, rather than Indonesia, will be a great place to invest in this year, according to Forbes Magazine.

In an article recently published on Forbes Online, Peter Cohan recalls his visit to Singapore in January 2012 where he met with a hedge fund manager having invested in many Asian companies for years.

The hedge fund manager said that Indonesia used to be a great place to do business, but the best opportunity in the region in 2012 is to invest in Vietnam.

He studied the Vietnamese stock market and found 20 stocks with Price/Earnings (P/E) ratios of 2, cash flow growth of 14, and dividend yields of at least 12.

Cohan explained that a stock is cheap if its cash flow - the money left over after paying expenses - is growing faster than the P/E ratio.

A stock is a reasonable value if the ratio between a stock's P/E and its earnings growth or Price/Earnings to Growth (PEG) is 1.0 or below. By that measure, stocks in Vietnam are very cheap at 0.14 - dividing the P/E of 2 by the cash flow growth of 14.

In addition, Vietnamese stocks offer a very high dividend yield.

Their 12 percent yield is extremely high - particularly compared to the sub-1 percent rates that we are used to earning on our bank accounts, Cohan noted.

According to Cohan, the downward trend in the Vietnamese stock market in 2011 offers the chance for private equity investors to buy stakes in some of the country's biggest companies and the purchase is benefitting investors.

Cohan concluded that there are opportunities for businesses to invest in the banking, food and beverage industries in Vietnam, as its population increasingly moves from the lower to middle class income level and banks and food companies are willing to meet their demands.

Vietnam Dong advance.

The Socialist Republic of Vietnam is the easternmost country on the Indochina Peninsula in Southeast Asia.


With a population of over 89 million, Vietnam is the 13th most populous country in the world.
Lately the country's currency,the Vietnam Dong advanced to a two- month high on speculation the supply of dollars has increased after the government capped deposit rates for accounts denominated in the US currency. government bonds gained.
The country now has an "abundant" supply of dollars as individuals and companies have been selling about $10 million to $15 million a day to banks, the government said in a statement on its website yesterday.
The State Bank of Vietnam imposed a 3 percent ceiling on the dollar-deposit rates banks could offer to individuals, which took effect April 13. Dong accounts offer interest as high as 14 percent.


The dong gained 0.5 percent, to 20,540 per dollar as of 4:01 p.m. in Hanoi, according to prices from banks compiled by Bloomberg. That was the strongest level since February 10.
The country's exports earned $7.3 billion in April, down by $150 million from the previous month, according to the Ministry of Industry and Trade (MoIT). The ministry said price increases helped raise the export turnover by over $2 billion. The nation's import value reached $8.7 billion in April, down slightly from March's figure, bringing the total import turnover in the first four months of the year to $31.83 billion, a year-on-year increase of 29.1 percent.
As a result, the country's trade deficit for the January-April period was estimated at nearly $4.9 billion, up 6 percent in comparison with the same period last year.
Meanwhile Moody's Investors Service Inc. said its negative outlook on Vietnam reflects balance of payments uncertainty, with any change contingent on recent tightening measures arresting inflationary pressures and containing the volatile exchange rate.
The ratings agency also warned, however, that the rating could face further downward pressure if there was continuing erosion of the Southeast Asian nation's foreign-exchange reserves estimated at $12.2 billion at the end of 2010, compared with a peak of $25.8 billion in February 2008.

Tracking the Dow,Friday 29/04/11.
Economic Report:Personal Income,Employment cost Index,Chicago PMI,Consumer sentiment,Farm Price & Bernanke speaks.
Asian Index Futures expires .

9:30am:--Bullish 30.0 points gap up.Economic data has been very positive .
10:30am:--Holding at near session high.No sign of opening gap being filled.Caterpillar were up 2.8 percent after it reported a record first-quarter profit on strong demand.
11:30am:--Another session high confirming bulls in control.
12:30pm:--Bulls charging to another double top.Shooting star warning.
1:30pm:--Dark clouds hanging near morning's high.
2:30pm:--A pullback to the bull's support line.Hammer pattern noticed.Any technical rebound here is a trap.
3:30pm:--Inverted bulls prevented profit-takers from pulling it to the MAV support line.
4:00pm:--A bearish graveyard doji closing.
Better-than-expected earnings helped lift the Dow Jones Industrial Average to its highest closing level in early three years.
[Federal Reserve Chairman] Ben Bernanke, vows to keep interest rates low forever, or at least for awhile and this will further booost the Dow index. Although the Fed said there would be no new quantitative-easing program,the low interest regime will be the powertool to spearhead the US economy back into a strong footing.

Remarkable Vietnam.

The Stock Trading Center of Vietnam (‘STC’), located in Ho Chi Minh City, was officially inaugurated on July 20, 2000, and trading commenced on July 28, 2000. Initially, two equity issues were listed, Refrigeration Electrical Engineering Joint Stock Corporation (‘REE’) and Saigon Cable and Telecommunication Material Joint Stock Company (‘SACOM’). It is the smallest stock exchange in Southeast Asia. The Vietnam stock exchange is both operated and regulated by the State Securities Commission.
About nine out of thirteen companies have capital of VND43bn (US$2.73m) or more and have been licensed by the State Securities Commission and Ho Chi Minh City Stock Trading Center to conduct a full range of securities business including brokerage, advisory, fund management, proprietary trading and underwriting.
Saigon Securities Incorporation, Hai Phong Securities Joint Stock Company and EAB Securities Company have chartered capital ranging from VND20-22bn (US$1.27m-US$1.4m) while Mekong Securities Joint Stock Company are capitalized at VND6bn (US$0.38m). Neither company is licensed to conduct proprietary trading or underwriting.
Foreign ownership of shares in companies listed on the Ho Chi Minh City Stock Trading Center is limited to 49% of the company’s issued share capital. For bonds, foreign investors can hold 100% ownership of a particular issuer’s bonds.
Foreign investors who wish to purchase shares through the Ho Chi Minh City Stock Trading Center are required to register through a custodian licensed to hold securities on behalf of foreigners – of which there are currently three; The Hongkong and Shanghai Banking Corporation, Deutsche Bank AG and Standard Chartered Bank. Beside these three, securities companies can play role of custodian unit to hold stocks for foreigners as well. Once registered, a Securities Transaction Code is issued to the foreign investor who may then open a Trading Account with one or more of the twelve licensed Securities Companies.
For private investors, it is necessary to fly to Ho Chi Minh City (Saigon) to open a securities account and a bank account. Foreigners are able to transfer funds out of Vietnam after fulfill tax obligations. There is no time constrain.
Vietnamese Brokerage Firms;-
HANOI:--
Vietcombank Securities Co. (VCBS),Bank for Agriculture and Rural Development Securities Co. (Agriseco),Industrial & Commercial Bank Securities Co. (IBS),Bao Viet Securities Co. (BVSC) ,Bank for Investment and Development of Vietnam Securities Co. (BSC) ,Thang Long Securities Co. (TSC),Mekong Securities Co. (MSC) .
Ho Chi Minh City:--
Asia Commercial Bank Securities Co. (ACBS),Saigon Securities Incorporate (SSI)
The dow Thursday.7/01/10 is 6market days to index futures expiry.

9:30am:--A bearish gap down opener with a failed gap recovery.The dollar gained against a basket of foreign currencies.

10:30am:--Ascending soldiers filling the opening gaps completely.

11:30am:--Session high pullback now being held at the bull pivot with a dragonfly doji.

12:30noon:--Consolidation hour,bears still in control. Latest weekly initial jobless claims total, which was generally flat.

1:30pm:--Retracement to near high but strength in the dollar index weighed on commodity prices this session.

2:30pm:--Sudden spike up to new session high.It's the strength among financial issues that helped carry the broader.

3:30pm:--The high of the day after an earlier pullback to the bull pivot support line.

4:00pm:--Closes near the day's high and the dragonfly doji stars were sighted.

Thursday's equities have recovered from a sell-off at the top of the hour following a headline which detailed a warning about interest rate risks to U.S. banks.

A new high of the week was noted despite having tried to bring it down below the MAV support line.It's the 7th day before index futures expiry by having a pullback in view of the beginning being bullish.

Vietnam-the emerging market.

Vietnam’s first exchange-traded fund listed in the U.S. stock market rose in debut trading as foreign investors sought to tap into a rally that has made the Southeast Asian country’s benchmark equity index the eighth-best performer in the world.
The Market Vectors Vietnam ETF rose 4.1 percent to $26.02 in New York Stock Exchange trading. The fund, introduced by New York-based Van Eck Global, is part of a growing trend of emerging-market equity ETFs. Unlike mutual funds, whose shares are priced once a day, ETFs are listed on an exchange and trade like stocks.
Vietnam, the world’s second-biggest rice and coffee exporter and the biggest cashew producer, has posted average annual economic growth of 7.5 percent this decade, helping lure investment to the country.
“Countries that are able to export and provide some of the food for the rest of the region and indeed the world, like Vietnam, are going to become increasingly important,” David Semple, who helps manage about $13 billion in equities and commodities at Van Eck, said in a presentation unveiling the ETF in New York today.
Vietnam’s benchmark VN Index, a measure of 162 companies on the Ho Chi Minh City Stock Exchange, has gained 61 percent this year, putting it in the top 10 of the world’s best-performing equity benchmark measures among 89 indexes tracked by Bloomberg.
ETF Growth
Emerging-market equity ETFs are benefiting from growing investor demand, with the funds’ assets under management jumping 83 percent to $130 billion this year, according to Barclays Plc data.
Vietnam’s economy expanded 6.2 percent in 2008, the slowest pace since 1999, as higher interest rates and lending restrictions curb construction and the global recession hurts tourism.
A revival in construction as stimulus spending began to filter through the economy and costs for cement and steel dropped underpinned an acceleration in second-quarter growth to 3.9 percent from 3.1 percent in the first quarter.
Growth Pickup
The pickup in growth helped the VN Index rebound from a 66 percent slump in 2008. The stock market rally this year also led to the listing of Joint-Stock Commercial Bank for Foreign Trade of Vietnam, the country’s third-biggest bank, and of Bao Viet Holdings, its biggest insurer.
Vietnam has “largely completed” its more than two-decade- old shift to a market-based economy, according to a study performed for a Asia-Pacific Economic Cooperation forum.
The Southeast Asian country’s ruling Communist Party introduced economic policy changes in 1986. The reforms led to the sale of shares in state-owned companies, the birth of stock markets in Ho Chi Minh City and Hanoi, and Vietnam joining the World Trade Organization in 2007.

The nation's fledgling official bourses in Hanoi and Ho Chi Minh City are surging,vietnamese are making the kill.

Over the other corners, the gray market is also flourishing, spurred on by Vietnam's robust growth, optimism surrounding the country's recent entry into the World Trade Organization, and the rapid rise of sanctioned stock markets.

It was estimated that at least 500,000 Vietnamese are participating (five times the number of accounts on the two official bourses), aided by more than a dozen private websites and online forums with names like mua re (street trading) and Sanotc.com.

Participants call this the over-the-counter (OTC) market, a reference to exchanges abroad that provide an arena for trading small stocks. But unlike OTC bourses elsewhere, Vietnam's market has no licensed brokers, virtually no regulatory oversight, and trades often culminate with the exchange of cash for paper shares at a local tea shop.