Emerging markets should be a good source of income in the years ahead, with emerging Asia looking most appealing, and Vietnam the standout performer.
We have been gold bugs since 2001 (and still are). Another longtime favourite of ours is Vietnam. In 2005 we noted that it was Asia’s “other communist dynamo” (it still is). In 2007 the International Monetary Fund’s (IMF) chief economist referred to it as an “emerging China”. The IMF may have failed to forecast the global financial crisis in 2008, but that time it was on the money.
Women in traditional “ao dai” dress parading in Vietnam
Vietnam piqued our interest because it seemed to be following in China’s footsteps with a ten-year delay. It embraced the free market in the mid-1980s, and since then has attracted attention as a cheap manufacturing base: wages are around a third of Chinese levels. It has also moved up the value chain as foreign investment and expertise has flooded in. Most Samsung smartphones are made there and it is a major electronics exporter. Cris Heaton points out in this week’s cover story , there is still considerable potential here if you tread carefully. Valuations in these emerging markets now seem to price in much of the recent turbulence.
The article is reposted from MoneyWeek.
Andrew Van Sickle is MoneyWeek’s managing editor.