Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
Ending Syria’s Nightmare will Take Pressure From Below - 29th Mar 17
Charts That Reveal US Real Employment Status and It’s Not Good - 29th Mar 17
SNP Controlled Scottish Parliament Demands Right for Scotland to Commit Suicide - Indyref2 - 29th Mar 17
USD Gold Myriad of Signs - 28th Mar 17
Ominous Social Trends That Will Shape Our Future - 28th Mar 17
Foundation And Empire: Is Donald Trump The Mule? - 28th Mar 17
Top Ten US Dollar Risks - 27th Mar 17
The Popularity of Gambling and Investing Amongst Students - 27th Mar 17
Is Political Betting on the Rise? - 27th Mar 17
US Stock Market Consolidation Time - 27th Mar 17
Russia Crisis - Maps That Signal Growing Instability and Unrest - 27th Mar 17
Goldman Sachs Backing A Copper Boom In 2017 - 27th Mar 17
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

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.


© 2005-2016 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

Catching a Falling Financial Knife