Next month I go to Vietnam.
Thirty years ago, it was a ruined country, devastated by one of the most grueling wars in modern history. Today, its a bustling economy of prosperous cities, terraced rice fields, tropical forests, and rolling hills.
Hanoi, the capital, was virtually wiped out by Nixons Christmas bombing of 1972 a massive, round-the-clock air campaign that exceeded any urban bombing ever in the history of that war.
Now, Hanoi is a burgeoning metropolis with more people than Chicago, more scooters than Beijing, and more new factories under construction than virtually any capital in Southeast Asia. Five-star hotels have replaced war-era bunkers. Skyscrapers have replaced shanties.
This is not just another Taiwan or Singapore in the making. No, Vietnam is poised to be an Asian Tiger in a class all by itself so much so that bankers the world over are scrambling to get into Vietnam.
GEs Asian Consumer Finance Division is making Vietnam its number one effort in Southeast Asia.
Singapores Overseas-China Banking Corp. is negotiating to purchase 10% of one of Vietnams largest banks.
HSBC … the Australian and New Zealand Banking Group … and Standard Chartered have each bought interests in three state-owned Vietnamese banks.
When Bankers Move into a Country Like
This, It Means Something Big Is Happening
What do they see, and what can you do about it?
They see a country growing at a stunning 8% per year for 10 years running.
They see an economic engine driven by one of the youngest and most vibrant populations in Asia 83 million people, with over half under the age of 30, with 94% literate and well educated, ready to go to work, eager for opportunity.
Perhaps most important, they see the lowest cost educated labor pool in the world, working at a minimum wage of a meager $38 per month!
Now, in addition to all of this, let me tell you what Sean and I see:
A Country on Chinas Southern
Border Loaded With Vast and
Undervalued Natural Resources
Most people dont know this. But a key factor behind Vietnams persistently explosive growth is that its among the richest in natural resources in the region.
So with neighboring China now gobbling up natural resources like a giant blob, and with natural resource prices flying, billions of dollars of investment capital are begging to pour into Vietnam.
Vietnam is loaded with phosphates, coal, manganese, diamonds, bauxite, chromate, on- and offshore oil and gas deposits, lush forests, and abundant rivers for hydropower.
The country boasts …
- 600 million barrels of proven oil reserves …
- 6.8 trillion cubic feet of proven natural gas reserves, and …
- 20 billion tons of coal.
Vietnams coal industry is especially promising.
Right now, a lot of the coal is still transported on decades-old barges, and even carried for miles on the backs of peasants.
But new technology and capital is being introduced, and the industrys growth surpasses anything Ive seen elsewhere.
Vietnam is already the third largest oil producer in the region, turning out nearly 390,000 barrels a day, earning the country $7.4 billion in 2005.
Plus, its own oil domestic consumption, a sign of its rapidly developing economy, is also growing like crazy at the rate of 17% per year.
The government plans to spend $109 billion building 74 power plants by 2020, including 48 hydro-electric, 17 coal-fired, five gas-fired, two nuclear and two renewable-energy.
Already, there are 25 foreign oil companies from 13 countries with 27 projects in Vietnam. Already, theyve invested $7 billion. And over the next several years, they should invest many times more. In fact,
Vietnam Now Has the Same
Foreign Direct Investment as
India, a Country 13 Times Larger
Alongside the staggering economic explosion, a mind-boggling $5.4 billion in new foreign direct investment (FDI) will hit Vietnam this year alone.
Thats roughly the same amount of FDI that India, a country 13 times larger than Vietnam, expects to see in 2006.
My view: If you can attract the same amount of foreign investment as a country 13 times larger, the outlook is bright indeed.
The most advanced countries in the region agree: Norio Hattori, the Japanese ambassador to Vietnam says the feeling of Japans corporate sector is that Vietnam will be their next FDI target. Taiwans industrialists, known for their cost-conscious, export-led manufacturing, are flocking to Ho Chi Minh City and Hanoi in droves. Big money is pouring in from China and South Korea. Each is endorsing Vietnams growth like never before.
As a result …
Vietnams Stock Market
Is Exploding Higher
From a low of 136.21 in October 2003, the Vietnam Stock Exchange Index is now trading at 523.32 up a whopping 284% in less than three years.
Thats like the Dow moving from its 2003 low of about 7,200 to 34,848. Amazing.
Right now, there are only 36 companies listed on the exchange, 35 of them worth over $1 billion. But there will soon be many, many more.
If I were younger, back in my mid-twenties, Id buy a seat on their exchange, move to Vietnam, and start investing in Vietnams market like crazy.
But Im not in my mid-twenties. Odds are, neither are you. But opportunities to invest in Vietnam from the comfort of your living room are opening up, and Sean and I are digging them up, and well alert you when were ready to roll.
Also, stay tuned to my Real Wealth Report, dedicated to natural resources. The next issue, featuring a full spread on Australia, goes to press on April 14. And given everything thats happening right now, my latest report on gold, which Ive just posted to the Web, is not something you should miss.
Why the Timing
Couldnt Be Better
This is indeed a momentous occasion. Gold is within a hair of hitting $600 an ounce, a level I forecast over five years ago when the yellow metal was fetching a mere $260.
Back then, in early 2001, I also forecast a new bull market in the price of oil at a time when it was trading in the high teens. Today oil is trading at nearly $68 a barrel, within a fraction of new highs and headed toward the $100 level this year.
Along with the bull markets in gold and oil, the price of virtually every natural resource under the sun is also soaring. And as a result, the portfolios in my Real Wealth Report are surging.
Real Wealths model Gold Portfolio is now up 43.5%; its Natural Resource Portfolio, up over 29%, Income Portfolio, up 23%; and bonus positions, up 56%. The only laggard: the Speculative Portfolio, up .9%.
The total dollar value of the open gains (before broker commissions): Almost $19,000. Add in another $16,207 in previously booked gains in these hot markets, and the total dollar value of the gains (losers included) is over $35,000, or about 350 times the yearly subscription cost.
Of course, each investors results will vary. And no matter how confident we may be in this natural resource boom, its always prudent to keep a fat cash position, recognizing that no investment goes straight up, and that losses are always possible. But unlike any other time in recent memory, I believe you now have …
An Unbelievably Strong and
Persistent Wind in Your Sails
That strong wind should be very familiar to you. Its inflation.
And its now more solidly built in to todays global economy than at any time in our lifetime. I say that for two fundamental reasons:
Reason #1. Right now and as far as the eye can see there isnt a central banker in the world who would opt for disinflation, let alone outright deflation. In recent years, theyve proven, beyond a shadow of a doubt, that they will fight for inflation tooth and nail.
Reason #2. India and China.
Mark my words: Years from now when the history books are written, the period you and I are living in now will become known as the genesis for one of the most inflationary periods of all time.
Im not talking about 16% inflation that comes and goes like a cat-3 hurricane, as it did in the U.S. in the late 1970s. Nor am I talking about the kind of hyperinflation that devastated Germany like an F-3 tornado after World War I.
What I see is a sweeping climate change akin to global warming a tenacious, ubiquitous inflation that grows steadily to high single digits … then low double digits … and ultimately higher double digits …
A long-term inflation that comes, stays, and lasts for a decade or more …
A ground-up inflation thats rooted in natural resources and squeezes their prices to heights never seen before, and …
A demographics-driven inflation pushed inexorably higher by hundreds of millions of people in China and India as they begin to sample higher standards of living, demand better wages, and set off wage hikes worldwide.
This is not the kind of inflation that mandates quick in-and-out trading. Its the kind that long-term even conservative investors can make good money with, especially in countries like Vietnam.
Best wishes,
Larry
For more information and archived issues, visit http://www.moneyandmarkets.com.
About MONEY AND MARKETS
MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Larry Edelson, Tony Sagami and other contributors. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MAM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MAM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Contributors include Jennifer Moran, John Burke, Beth Cain, Amber Dakar, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others.
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