President Barack Obama is on a hearts and minds mission in Vietnam. Of course, it's always going to be fraught, in terms of the troubled past. But it should be a smart one in terms of trade.
It was inevitable that the United States would remove its arms ban with Vietnam, as it just did. Such an overhang from the Vietnam War -- known as the Resistance War Against America in Vietnam itself -- is well overdue to be removed.
Vietnam is a pocket-rocket economy that is worth watching. It is part of the Trans-Pacific Partnership, and will be the biggest winner out of that deal, according to academic research. It stands to see a 23.7% boost in its economy by 2025. The second-largest beneficiary? Malaysia, with only a 6.4% jump in gross domestic product.
Vietnam's economy is much like China's, but it has been considerably more volatile. It would be one of the most extreme markets in Southeast Asia for investors to look to play. The economy was up 5.5% in the first quarter of the year; pretty impressive, but still down from growth of 6.1% the same time last year.
That leaves it only slightly below China's rate of growth, and the two centrally governed economies, and neighbors, are quite similar in profile.
South Korean investors have been the most active in Vietnam of late, deploying $889 million in the first three months of this year, including a $300 million data center that Samsung is building in Hanoi. Singaporean, Taiwanese, Japanese and Hong Kong investors have all also been major players.
Like China, the country is set to benefit from the laying down of a lot of concrete. Ho Chi Minh City (Saigon to you and I) has 14 infrastructure projects due to launch this year. Hanoi is installing its first subway system. The first four stations should debut in April.
Coupled with a young population -- 41% of Vietnamese people are younger than 25 -- you've got an economy that's set for great retail sales growth and consumption in general. Personally I would rate the Philippines as a better prospect for share growth, but given China's slowdown, Vietnam isn't a bad way to play Asia either.
There's really only one way for U.S.-based investors to do that domestically. The VanEck Vectors Vietnam ETF (VNM) is down 2.9% this year, but not far off a low that it last set in January 2012. I don't see it going a lot lower.
Will Obama's visit shift that exchange-traded fund? No. But will it be one to watch for the future, if you're looking for emerging markets exposure? That's for sure.