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Global Economics Final Project - Fdi in South East Asia

Autor:   •  December 12, 2015  •  Coursework  •  1,461 Words (6 Pages)  •  1,014 Views

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Global Economics Final Project

The investment I would choose is the JPMorgan Vietnam Opportunities Fund. The Fund is therefore exposed to emerging markets, to provide investors with long-term capital appreciation through investment primarily in companies. Because of the high future potential in Vietnam, which I’ll specify in the following paper, I think it will be a good investment for the future.

For a quick overview I’ll point out some important facts of the JPMorgan Vietnam Opportunities Fund.

[pic 1][pic 2][pic 3]

[pic 4]

Macroeconomic Environment

Vietnam’s stock market has been among the world’s leaders year-to-date. The extraordinary level of foreign net inflow has been the key driver. Year to date foreign net inflow has been US $108m. There are a number of factors that make Vietnam an attractive investment destination at the moment. A lot of it has to do with a quite stable economic environment in terms of inflation, currency stability and political stability. This stability has been going on for 24 to 36 months now.

As a result Vietnam’s GDP per capita has risen continously during this phase of stability in the past years. (http://data.worldbank.org/indicator/NY.GDP.PCAP.CD)

Year

2009

2010

2011

2012

GDP per Capita

1,232

1,334

1,543

1,755

Inflation %

6.2

12.1

21.3

10.9

Annual GDP growth

5.4

6.4

6.2

5.2

In 2011, the Vietnamese government started different programs to ease the inflation which led to an inflation of 6% in December 2013, the lowest inflation level in the past 10 years.

[pic 5]

One negative effect of lowering and stabilizing the inflation is the slow down of the economy. But the Vietnamese economy is still expected to grow 5.4% this year, but slightly below the government’s target of 5.5%. But this low inflation allows Vietnam to raise bank credit to help speed economic growth next year, which the government has targeted to accelerate to 5.8%, from 5.4% expected this year.

This stable environment was proven by the tapering activites of the Fed in late 2013 and the continuing quantitative easening by buying mortgage-backed securities and U.S treasury bonds. We saw a lot of emerging economies’ currency devalue significantly against the U.S. dollar which created a perception of instability because of falling interest rates around emerging markets. Many investors pulled their money out of the emerging markets, but at the same time Vietnam showed a very stable currency that didn’t lose any value.

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