Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

The Growth of the Asian Hedge Fund Industry, with Vietnam as a Superior Location

Companies / Hedge Funds Sep 04, 2015 - 01:17 PM GMT

By: Submissions

Companies

Dylan Waller writes: The Asian hedge fund industry, which grew by approximately 30% in 2014, is poised for substantial growth.  Asian hedge funds were able to hold their ground in 2014, a year that was particularly challenging for the hedge fund industry in general.  During Q2 2015, Asia Pacific based hedge funds returned 5.14%, while hedge funds in North America only returned 1.19%, and Europe based hedge funds reported a loss of 0.11%.  The historical superior performance of Asia Pacific hedge funds certainly necessitates a shift of hedge funds to this region.


Necessary Growth of the Asian Hedge Fund Industry

Asia-Pacific Hedge Funds

Despite their relatively superior performance, Asia Pacific based hedge funds only account for 4.8% of the industry.  The historical superior performance of Asia-Pacific hedge funds, coupled with the higher economic growth in this region, will result in the continued growth of this industry, as it will be seen as a superior site for investment.    In addition to its recent superior performance, the three year annualized return of Asia Pacific based hedge funds has also been the highest in the industry.

Vietnam’s Potential as a Strategic Site for the Asian Hedge Fund Industry

The soon to be initiated TPP, coupled with Vietnam’s recent removal of the foreign ownership limitation this month, are two crucial catalysts that will further contribute to the country’s economic growth, and its soon to be transition from a frontier market to an emerging market.  As investment outlook in China is transitioning from bullish to bearish , with  its recent currency depreciation and slowed economic growth, Vietnam stands out as a superior alternative in Asia.  Vietnam has emerged as a superior location for manufacturing, as companies shift to reduce operational costs.  According to a report by Standard Chartered Bank, companies can save around 19% on operating costs by shifting from China to Vietnam.  Vietnam also has the relative advantage of lower corporate taxes, which should be reduced to 20% by 2016; this would result in corporate taxes being 5% lower than China.

Vietnam can also be seen as a superior site for value investing, as it has a large variety of stocks that have a single digit P/E ratio, high ROE, and high dividend yields.

  • Hoa Phat Group, which has the largest market share for steel production in Vietnam, currently has a P/E ratio of 5.06.  The company has consistently increased its bottom line since 2012, with a 60.9% increase in its net income during 2014.
  • Petrovietnam Drilling and Well Services was able to fare well during 2009, when oil plunged to a record low, which historically confirms the company’s ability to cope amidst low oil prices. The company’s P/E is currently 5.19, and it has consistently increased its bottom line since 2010; net income only fell by 8.7% during 2009.
  • Vinamilk, the most sought after company by foreign investors, currently has P/E ratio of 14.33.  Foreigner investors have been willing to pay a 20% premium for this company.

Investment Implications

Investment funds in Vietnam that utilize a value based investment approach have been extremely successful, providing a stable benchmark for hedge funds that wish to enter Vietnam.  Based on my observation of the industry in Vietnam, the following funds are the best pick for investors.

  • The Vietnam Emerging Equity Fund is an open ended equity mutual fund launched by PXP Vietnam Asset Management.  The fund currently has around 52.5% of its assets invested in companies fully held by foreign investors, which will be a substantial catalyst for the fund with the recent removal of the foreign ownership limitation.  Previous performance has been substantially better than the VN index.
  • Asia Frontier Capital has been extremely successful investing in Vietnam, with a strategic approach of choosing companies with low valuation and high dividend yields.  The AFC Vietnam fund has returned 39.67% since its inception in December 2013.
  • Investors who wish to take advantage of deeply discounted closed end funds, should consider Vietnam Holding Ltd. and VinaCapital Vietnam Opportunities Fund, which trade at a 17.33% and 18.35% discount respectively.  Both funds are listed on the London Stock Exchange.

The growth of the Asian hedge fund industry is certainly befitting, and I believe that Vietnam will be a superior location for investment in the future.

About the Author

Dylan Waller is a contributor for Seeking Alpha, and an intern for the crowdsourced consultancy Wikistrat.

dylan@nomadicequity.com

http://nomadicequity.com

© 2015 Copyright  Dylan Waller - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules