The Opportunity Behind a Massive Disconnect by Karim Rahemtulla
Between 1991 and 1999, the value of Chinese investments in Vietnam, its neighbor to the south, was about US$120 million.
By 2010, that number had ballooned to more than US$3 billion. And if you add the amount pumped in through Hong Kong, the amount more than quadruples to close to $15 billion in projects.
The influx of cash in the early mid-2000s sent Vietnamese stocks soaring.
But as is often the case in emerging markets, when the spending bubble burst as a result of the accompanying high inflation, the market crashed to a tune of more than 70% from its highs to its lows reached early last year.
I was in Vietnam last year, on the ground, doing research in Ho Chi Minh City (formerly Saigon) and Hanoi. It was hopping! I was puzzled. This was an opportunity that could not be passed up.
There was a massive disconnect, and there still is, between what was happening on the ground and what was reflected in stock prices.
Coupled with the fact that China has no choice but to expand production using lower-cost Vietnamese workers, this was an unparalleled emerging market opportunity.
Vietnam is a vibrant country. The majority of the population is under age 45. They take pride in education and putting in a hard day's work.
The norm there is to work all day and then go to school in the evening for technical courses. The people want to get ahead, and it shows in the buzz on the streets.
The Vietnamese market will recover. Already since my trip they market has performed better than most in the world, up over 20%. It has more to go -- much more.
http://moneymorning.com/2012/04/16/wher ... eir-money/
It's all about "how much you made when you were right" & "how little you lost when you were wrong"