Investing Beyond Europe: How Vietnam Fits in the Story
Many professional investors across Europe diversify, but where are they looking next for real growth? In this article, we pull some insights from the latest report by the Investment Research Group, Finland's official fund database, to paint a picture of the country's investment environment as well as general trends that reflect a growing interest from European institutional investors in emerging economies.
As an asset manager with roots in the Finnish investment landscape, Kenno also aims to provide those among our readers who are not yet familiar with emerging markets with a glimpse of Vietnam— a Southeast Asian country with stable geopolitics, a thriving economy, and a developing stock market that offers high growth potential at a reasonable price.
Image: Peter Nguyen on Unsplash
European Investment Trends: A Snapshot from Finland
Data: Investment Research Finland (Q3/2024)
On the other hand, Finland-domiciled funds with a focus on Japan have experienced a decline of over 20% in asset growth since the start of the year, suggesting a more cautious approach towards certain traditional, highly competitive global markets.
Data: Investment Research Finland (Q3/2024)
While emerging markets accounted for only 8.3% of institutional equity allocation, Finnish assets in these markets have achieved a higher year-to-date growth rate than that of Finland and the rest of Europe. This suggests a slight change in institutional investors' risk appetites as well as an eye towards areas with higher potential growth opportunities.
Why Invest in Vietnam?
When it comes to developing markets, Vietnam, which ranks among the world's top 20 fastest-growing economies this year, is increasingly recognized by global investors as a key investment destination within developing markets, particularly due to its recent strides in regulatory improvements.
Data: General Statistic Office of Vietnam (GSO), Transparency International, IMF Data Mapper, WEF, OECD, United Nations, Trading Economics, HCM Stock Exchange, HN Stock Exchange
Notably, the upcoming removal of prefunding requirements from November 2nd is expected to be a crucial step for Vietnam to achieve Emerging Market status. This change facilitates easier market access for international investors, aligning the country further with global standards, as highlighted in the recent FTSE Country Classification Update.
As Vietnam's economy and financial market maintain their stable development, various sectors such as domestic consumption, manufacturing, and technology, offer significant potential for growth, attracting attention from both institutional and retail investors.
How Kenno Bridges International Investors to Vietnam's Potential
Compared to emerging markets, the allocation from Europe to Vietnam is relatively modest, most likely due to market uncertainty and lack of local domain insights. However, through rapid economic growth and regulatory reforms, the country is overcoming these barriers. We believe the current underrepresentation of European investments makes this a promising time to establish a foothold in an evolving market.
At Kenno, we recognize the unique opportunity that Vietnam presents at this point in its long-term growth journey. That is why we diversify our portfolio with sustainable businesses across high-demand sectors such as consumer goods, real estate, technology, and healthcare. This thematic, value-oriented investment strategy has helped our fund outperform several peers and regional benchmarks over the past several years, achieving a gross IRR of 16.7% since its inception.
With our global reach and on-the-ground expertise, we're well-positioned to help investors capitalize on Vietnam through a well-researched, responsible, and actively managed investment approach. Should you need a closer look at investment opportunities in Vietnam, we invite you connect with us for more information and tailored advice.
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Disclaimer:
This document is prepared by Kenno Asset Management Pte. Ltd. ("Kenno"), the investment advisor for the Asia Top Picks Fund which is open only to professional investors. This marketing communication does not constitute investment advice. Please refer to Kenno’s official fund documents before making any final investment decision.
The information provided in this document is accurate as of the time of writing. Kenno does not guarantee the ongoing accuracy or completeness of this information and is not responsible for updates or changes after publication.