Global Economics Final Project - Fdi in South East Asia
Autor: Koratis • December 12, 2015 • Coursework • 1,461 Words (6 Pages) • 1,165 Views
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.
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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.
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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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