|The consumer goods sector is among the most promising for investment in Việt Nam. — VNS Photo|
HCM CITY — Consumer goods, healthcare, energy, construction materials, infrastructure, and technology are among the sectors with enormous potential for investment in Việt Nam once the COVID-19 pandemic subsides, an expert has said.
Don Lam, co-founder and CEO of fund management company VinaCapital, recently spoke to a group of Korean investors through video conferencing about Việt Nam’s efforts to manage the outbreak, how the pandemic would affect the economy and investment opportunities now and post-pandemic.
“We have always preferred those sectors that are benefiting from Việt Nam’s domestic consumption, which is driven by several factors including urbanisation, young demographics, better jobs and high incomes, and a growing middle class.”
The consumer discretionary sector had traditionally seen the highest growth since people with more money in their wallet spend it on dining out, consumer electronics, jewellery, and others, he said.
“Although there is a short-term hit from the outbreak, we can continue to expect the sector to resume strong growth.”
Healthcare is another sector benefiting from the growing middle class since the public healthcare system is expanding yet overburdened.
Private healthcare is expanding, enabling some people who previously would have gone to Bangkok or Singapore for treatment to get it at home today, according to Lam.
Energy is another promising sector, with demand outstripping supply, requiring the country to import from neighbouring countries.
"LNG and renewables are the future," he said.
Domestic manufacturing, with companies that are involved in infrastructure or catering to the needs or desires of the growing middle class, is also an interesting sector as is technology, according to Lam.
Việt Nam has been going through a tech boom in the past few years, with start-ups working in a wide range of areas like fintech, AI, real estate technology, and logistics.
“Tourism will definitely make a comeback in 2021,” he said.
Việt Nam could benefit enormously as it is seen as a safe haven amid the outbreak and offers great value for money in addition to its beautiful scenery and rich culture, he said.
Of course the recovery time depends on the global economic condition, transportation options and the medical situation, but now is a good time to invest in the sector, according to Lam.
The stock market is also an option since its valuation has declined by 30-40 per cent during the outbreak, and many stocks are now attractive.
It now trades at a P/E of 10.3, the cheapest since 2012 and the lowest in the region.
But he also shared notes of caution about investing in Việt Nam, saying there are some risks just like in any other frontier and emerging market.
"To mitigate the risks and prepare for the best possible outcomes, investors need to take a long-term view, do thorough due diligence, fully understand the market, and have a trusted local partner," he said.
"The days of 'fast money' are over and patience is important when operating in Việt Nam," he warned.
"One of the biggest mistakes foreign investors make is that they assume all of Southeast Asia is the same, but Việt Nam is not the same as Thailand, Indonesia or Malaysia, and each country has its own development strategies and own way of working," he said.
Successful foreign investors would be those who tailor their products, services and workplaces to Việt Nam.
The global economic recovery would take time, but Việt Nam was well-positioned to rebound once the Covid-19 outbreak is under control, with revised forecasts still ranking Việt Nam among the fastest growing economies in the world, he added.
“The opportunity here is virtually endless.” — VNS