Vietnam has migrated from frontier to emerging markets. Mabrouk!

The Fed rate cuts, the China EV/AI miracle, doi moi privatisation and the FTSE Russell Emerging Market Index upgrade mean Vietnam can offer money making opportunities and I want to learn about the...

Ruchir D., is more valuable to my portfolio than Ruchi S., who helps me relearn macro data points from the major emerging markets, all of whom I have visited multiple times other than Indonesia. Ruchir D, who shares the same clan name as the Gujarati Prime Minister who ousted Mrs. Indira Gandhi after the emergency, is my Asian frontier market maestro based in Hong Kong, who help navigate me to the 70% dollar return in the Pakistan stock market, a country I have known all my life while he cannot even get a visit visa after the madness of Operation Sindoor. To be fair, I cannot get a visit visa for India either, even though I have an Indian wife for almost three decades, who is a direct descendant of the Mughal Emperor who built the Taj Mahal four centuries ago. Surely Agra is worth a mass, let alone a tourist visa LOL?

Ruchir D. has also won the prayers of three Sri Lankan sisters who work in my house with his recommendation to buy the shares of Commercial Bank of Ceylon, now up 30% since we had coffee at the Ritz Carlton terrace DIFC in early May. Ruchir had also told me to watch Vietnam like a hawk because the endgame of doi moi was a potential emerging market upgrade. This is exactly what happened this morning and the reason why I will be long Vietnamese stocks with a visit to Hanoi and Saigon (ok, Ho Chi Minh City until I get my VN visa).

The macro case for Vietnam is compelling. GDP growth for the next 3 years will be in the 7-8% range. Vietnamese equities were up 22% but that seems diddly squat relative to PSX’s 100% return in US dollars. Even Sri Lankan equities were up 80% plus in USD. Howzat Modi bhakts? Let’s play ball, let’s make love and money not war. Remember Lord Keynes? The Master taught us that in the long run we are all dead, so sab chalta hai. Life is a pure timepass, so just enjoy each other’s friendship, music and ethnic food. Be a real Vishwamithra and make the world proud about an ancient, resurgent, tolerant India, which welcomed everyone from the Baghdadi jews to the Sassanids Parsis and even my Ismaili ancestors to Bharat Mata. Pakistan? Bombing your own KPK people with F-16 warplanes and Cobra helicopters is not calculated to boost national integration.

The Fed rate cuts, the China EV/AI miracle, doi moi privatisation and the FTSE Russell Emerging Market Index upgrade mean Vietnam can offer money making opportunities and I want to learn about the Nam as it is today and not what it was in the time of The Deer Hunter, Platoon, Full Metal Jacket and Colonel Walter Kurtz. The comeback from Liberation Day has been spectacular for the VN index and it now seems dangerously parabolic to me.

Wall Street and Asia had largely expected the EM upgrade, so the pop on the stock exchange will probably not be nosebleed. In any case, this is not exactly the MSCI Emerging Market Index, the gold standard for EM tracker funds.

The inclusions in MSCI EM will not take place until September 2026. The Vietnamese dong is under rising pressure in Southeast Asia’s most volatile FX market. Outflows from the VN index large caps have been as consistent as they are ominous. While the upgrade means a broader pool of foreign investors, the momentum in Vietnam after a solid rally is fading while the dong is, as always, a wild card.

Vietnam was the big gorilla in the frontiers market index with a 30% weight but its $350 billion stock market will be a pipsqueak relative to India and South Korea, Indonesia and China, the four Asian EM colossi.

The example of Kuwait after it was upgraded from frontier to EM could well be enacted once again on a bigger scale in the Mekong Delta. I will not argue with a tsunami of $6 billion in passive money headed for Vietnam. EPS growth, political stability, reform and an easing of the US-China trade war are all bullish omens for Vietnam. So, a nervous long and not yet wrong in Saigon!