The U.S.-China trade war has the global economy in disarray.
The manufacturing industry, in particular, has suffered significant losses due to the tit-for-tat tariffs.
And while there has been hope that a quick trade deal would reset things, the reality is that we have now entered a new environment.
Companies are waking up to this fact and have begun transforming their operations. Mainly, they’re moving manufacturing out of China and into more U.S.-friendly countries.
Given the rapid improvement of living standards in China, it was inevitable that this would happen. But the ongoing turmoil has accelerated the transition.
This means that the time to invest in the “Next China” nations is running out fast.
Today, I want to tell you about one such market—Vietnam.
Vietnam—The Next China
In many aspects, Vietnam is China 20 years ago.
Demographically, the country is enjoying a golden era. More than 60% of its population is of working age (between the ages of 15 and 55).
Moreover, Vietnam has a large rural population, giving manufacturing and other labor-intensive industries access to cheap labor.
Finally, the country has a highly developed transport infrastructure consisting of highways, railways, and ports.
Given this very positive overall situation, it’s easy to see why so many companies today are moving their shops to Vietnam… and why this country will flourish in the next decade.
Vietnam’s Strategic International Relations
Vietnam is also a market to pay attention to right now because of its impressive portfolio of international trade agreements.
It’s part of ASEAN and CPTPP and has free-trade agreements with the EU, China, Japan, and India. Moreover, it has a bilateral trade agreement with the United States.
Recently, there have been some rumors that Trump is considering slapping import duties on Vietnam next.
The trade deficit with the U.S. has increased in the last two years, namely because companies are transshipping goods from China to bypass the tariffs.
However, fears that this could escalate in a full-on trade war are unjustified.
Vietnam, unlike China, is the United States’ strategic ally. The United States needs Vietnam to counter the Chinese influence in the region.
That was, in part, the reason the two countries signed the bilateral trade agreement in the first place.
In the same spirit, the United States also lifted the 50-year-old arms embargo and is now supplying the Vietnamese coast guard with patrol boats.
It’s hard to imagine a scenario where Trump would impose substantial tariffs on Vietnam.
#1 Investment In This High-Growth Market
Investing in Vietnam is a bit trickier than in other countries.
To purchase shares of Vietnamese companies directly, you would need a brokerage account in Saigon or Hanoi. Furthermore, getting your money out of Vietnam would be difficult because of the country’s capital controls.
So the best way to invest in this country is through an exchange-traded fund.
There are several options out there, but the one I like best is VinaCapital Vietnam Opportunity Fund Ltd (VOF.L).
It has an impressive historical performance (having returned over 300% since its inception), a high trading volume, and is run by a Vietnamese management team with expert knowledge of the market.