BEST GLOBAL STOCK MARKET RETURNS 2021 – HOW ABOUT VIETNAM?

Was Vietnam the best performing global stock market in the world in 2021? When searching this topic, do we use one of the popular Vietnam ETFs as a guide to measure this? Or should we refer to the VN Index, or maybe even some of the major closed end funds from active managers given that many acknowledge passive investing for Vietnam has its problems?

You can reach your own conclusions, but I shall explore such questions. Whichever way you cut it Vietnam is probably at least in the top ten performers but arguably even very close to the best in 2021.

Back in mid-November I wrote an article that suggested at the time the Vietnam stock market returns were amongst the best in the world for 2021. You can refer back to the discussion in the below link if you like:

WHAT WAS THE BEST PERFORMING GLOBAL STOCK MARKET IN 2021?

In mid-November the Vietnam market was already up some 33%, which made it extremely close to a top ten performer amongst a list of 87 stock markets.

WHAT ARE THE BEST PERFORMING STOCK MARKETS IN THE WORLD THIS YEAR? – VIETNAM STOCK MARKET (vietnamesestockmarket.com)

However one aspect I was contemplating since then was that such a large list of global stock markets includes many that realistically investors would not consider at all. Some markets on the list would not be accessible even if you wanted to invest there.

Then yesterday on twitter I came across a 2021 stock market return table that examined the performance of all the international ETFs that most investors typically have access to.

I think that is a more interesting way to explore this topic as it more realistically shows how one could have gone by picking the best country ETF in a given time period.

BEST INTERNATIONAL STOCK MARKET ETFS FOR 2021

Here are the top ten global stock market returns in 2021, if you were investing via their prominent ETFs available.

  • UAE +44.1%
  • Saudi Arabia +33.6%
  • Austria +31.5%
  • Taiwan +28.9%
  • US +28.7%
  • Canada +27.0%
  • Sweden +22.9%
  • Israel +22.8%
  • Netherlands +22.7%
  • Vietnam + 22.0%

Not a bad effort above from Vietnam coming in the top ten of a list of some 48 country stock market ETFs. However this chose VNM ETF as a measure which arguably significantly understates the extent of Vietnam’s high 2021 stock market returns.

Below is the full table by the way, a shoutout to twitter handles of @charliebilello and @ycharts which is where and how this data came about as I was looking for something like this for quite a while.

Getting back to my point of the VNM ETF understating the good Vietnam performance, part of this relates to some structural issues of this ETF. Amongst such issues are for example this is does not have the same access as locally based Vietnam ETFs have in terms of buying stocks subject to foreign ownership limits. This is perhaps in part a reason why VNM ETF at times has circa 20% of the fund in markets like South Korea, Taiwan, Japan. This might surprise some readers, although such stocks outside of Vietnam still usually have most of their operations in Vietnam.

I discussed these issues in depth in the below blog post:

A COMPLETE REVIEW OF VIETNAM VNM ETF

VNM ETF happened to underperform the VN Index by quite a bit in 2021.

COMPLETE VANECK VIETNAM VNM ETF REVIEW – IS VNM ETF A BUY? – VIETNAM STOCK MARKET (vietnamesestockmarket.com)

Most references to Vietnam’s stock market performance in 2021 would have quoted gains of around 36% measured by the VN Index benchmark.

BEST ASIAN STOCK MARKET RETURNS IN 2021

If you were an investor who happened to only contemplate the well know developed markets and a range of Asian markets, then such performance was a standout number 1 from 22 options in the table below:

Thanks to 2021 Scorecard | Philstar.com where I came across the above table.

VIETNAM ACTIVE OR PASSIVE FUNDS?

Then I would also emphasise again the bias I have had on this blog, that in Vietnam active management has much better odds of giving you a better result after fees than passive ETFs, compared to say markets like the US.

Looking back at my past reviews on active closed end funds and open-ended funds, my bias favoured four funds I shall give a mention to below.

VIETNAM ACTIVE STOCK MARKET RETURNS IN 2021

  • AFC Vietnam Fund + 55.3%
  • Pyn Elite Fund Vietnam +42.7%
  • Vietnam Enterprise Investments Fund (VEIL:LSE) (approx. total shareholder return) +40%
  • VinaCapital Vietnam Opportunity Fund (VOF:LSE) (approx. total shareholder return) +24%

Note with the above table for the CEFs like VinaCapital Vietnam Opportunity Fund & Vietnam Enterprise Investments Fund I have just looked at their approximate shareholder returns so this incorporates any fluctuations in the discounts to NAV. For example I believe the discount on both widened so their portfolios had a better year than what is implied above. Portfolio returns might be circa 45% for VEIL & 34% for VOF. I shall try to remember to update this post when I have such details.

Such massive returns in the space of 12 months might scare away many investors right now for 2022!

To put some context on that thought, I don’t believe we are near any sort of bubble-like conditions in Vietnam. Below I tackled this topic in November, and although the Vietnam market has continued higher since then, the points I made in this post below still apply I believe.

ARE VIETNAM STOCK MARKET VALUATIONS STILL CHEAP IN 2022?

We are still probably talking about Vietnam stock market forward PE ratios of circa 17 times as we began 2022.

ARE VIETNAM STOCK MARKET VALUATIONS CHEAP? – VIETNAM STOCK MARKET (vietnamesestockmarket.com)

So how did your investing go in 2021, are there some more obscure global stock markets that deserve a shout out for their 2021 performance that I missed above?

HOW BIG IS THE VIETNAM STOCK MARKET?

Now that the Vietnam stock market was one the star global stock market performers in 2021 the overall size of the market is considerably higher than just a couple of years ago. The market cap of Vietnam stocks listed on the Ho Chi Minh Stock Exchange (HOSE), closed the 2021 year at circa $US 260 billion.

Is Vietnam a good investment?

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Thanks!

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