VanEck Vietnam ETF (VNM) for trading in the US Market:
Trend following trading signals for entry:
- Buy 20% of funds designated for this trade, into VNM, when MACD & CMF are on a cross-over buys.
- Add another 10% when the price crosses above the 30-day MA and stays above for four consecutive days.
- Add another 20% when the price crosses above the 50-day MA.
- Add another 50% when the price crosses above the 150-day MA and holds it for three Days.
To Exit, use a 7% to 9% stop loss from the most recent high-water mark for a 100% exit from the ETF.
You may have your own tactic for a technical entry trigger and exit from markets. It is my view that the Vietnamese market is a good market to catch and ride a trend. It is similar to the precious metals market in this feature.
Vietnam is a very interesting country from a Geo-political perspective, Economic Perspective and an Stock Market Perspective. The fact that I live there seven to eight months each year has increased my interest in the Vietnamese market, of course.
- Vietnam knows its proximity to China so Vietnam attempts to keep a positive relationship with China, the United States, Russia and India as large countries who have a political or economic interest in the region.
So, Why Vietnam?
Vietnam, the country, is very impressive at this time. (sourced from TradingEconomics)
- Its GDP growth makes VN one of the fastest growing countries in the world. Vietnam’s gross domestic product (GDP) expanded 7.72% yoy in Q2 of 2022, much faster than a marginally revised 5.05% growth in Q1 and pointing to the third straight quarter of expansion.
- Annual inflation rate in Vietnam increased to a near 2-year high of 3.37 percent (lower than its growth rate above – a positive) in June of 2022 from 2.86 percent in May, mainly boosted by faster rises in prices of food & catering services (2.27 percent vs 1.32 percent), transport (21.41 percent vs 18.42 percent), and textile, footwear and hat (1.49 percent vs 1.32 percent). Meanwhile, prices of housing & construction materials continued to rise (1.53 percent vs 2.18 percent).
- The benchmark interest rate in Vietnam was last recorded at 4 percent. Higher than its inflation rate – a positive.
- Vietnam has a low percentage of its debt pegged to the US Dollar – a strong positive.
- Vietnam is or “could” be Energy Independent. They export coal to China, while importing coal from Indonesia. Vietnam is oil independent. It is a mineral rich country and has extensive hydro power as well.
- Vietnam is a very strong producer & exporter of agricultural products.
- Its Demographics are favorable with 60% to 65% of the population under 30. Literacy rate in Vietnam is 95.8%. The literacy rate in the United States is 88%. The official number of Vietnamese who can speak English is posted as 53.8%. It is higher in the bigger cities and declines the further you travel outside the metro area.
Ten year-chart of Vietnamese market.
The opportunity is in catching a ride on the strong, long-term trend following stock market performance.
Characteristics of Vietnamese market:
- The stock market in Vietnam is a “herd” driven mentality, so it can provide a long-term trend following environment. This a result of the combination of foreign money swinging into and out of the Vietnam markets. It is also a characteristic of Vietnam’s group focused culture.
- Accounting regulations are not strongly enforced, so technical analysis triggered signals are better than looking at company fundamentals.
- If looking at fundamentals, focus of revenue growth and dividends. These are most stable of the fundamental signals along with technical trading signals.
Would I buy this ETF as a long-term buy on Vietnam. No. I would not. There are better ways to enter individual Vietnam stocks if buying and owning. The dividends can be very rewarding from Vietnamese companies as an example. The market is volatile enough in Vietnam. You don’t want to ride the ups and downs of the ETF. It can, however, be very rewarding as a longer-term trading vehicle. The skill in working the Vietnam market from the USA, is to get in sync with foreign money entering and exiting the Vietnamese market.
Considering a trip to Vietnam?
Just for fun, here is a fun but true list of 10 Things You Should NOT Do in Vietnam by What the Pho! 12 minutes. For me, personally, I think of Hanoi as home. It is far from perfect or even convenient, but it is a happy, friendly and a comfortable fit for me. Hope to see you in Hanoi one day! Let me know if I can be of assistance.
Written July 16, 2022, by Tom Linzmeier at LivingOffTheMarket.com
LOTM Research & Consulting Service
* An account related to LOTM holds a position in this security.
Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.
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