"Following Eoin's insightful thoughts on Vietnam in the 10 December Comment of the Day, I thought you'd be interested in the following message I received from a friend just back from the country, where he is negotiating to set up a quite large public-private business venture:

"I just returned on Wednesday, having spent time Saigon, Hanoi and Hue in the central province, close to DaNang. Having seen the 4 largest cities, their infrastructure, commercial intensity, full flights, full taxis, full restaurants...., I agree that Vietnam is a serious investment opportunity.

"Labor is still very cheap, but unlike India, infrastructure is better and gov't efficiency is excellent. Not to say that the gov't isn't "corrupt". Bentleys, BMW's, Mercedes, everywhere --all gov't official's, but they are highly incentivized to deliver results and gov't is run like a business. I think that whatever it is, it is effective, at least now, and they got thru the tough economic times very well.

"Bangkok is also booming, but the energy in Vietnam is more electric and entrepreneurial. They are running things on their terms with foreign investment, whereas in Thailand, the foreign investor dictates."

David Fuller's view Thank you very much for this hands-on research, clearly from someone who is in a position to assess Vietnam's commercial potential. It tallies with our overall impression, that Vietnam is governed in a similar manner to China - organised and pragmatic, but perhaps somewhat less authoritarian.

We know that Vietnam (weekly & daily) has an inflation problem, compounded by a controlled devaluation of the Dong, shown inversely against the US dollar. However the weaker currency adds to its competitiveness and Vietnam still has the lowest stock market valuations in Asia, in terms of its historic PER, which despite the market's recent is still only 11.09, according to Bloomberg.

I continue to assume that Vietnam's Stock Exchange Index above is ranging in a lengthy base extension phase. The recent rally is encouraging, although not yet conclusive evidence that this pattern is about to support a sustained uptrend. However, I am not aware of any reason why the Index should retest its 2009 low, but I can easily imagine it retesting the 2007 high once a momentum move commences.

The long history of frontier markets indicates a tendency to range indefinitely, almost falling off investors' radar, before advancing several hundred percent. These markets are also high-beta, ensuring that they fall more than established markets during the bear phases.

I am likely to increase my small personal exposure to Vietnam next year.

Here is Eoin's assessment on 10th December, referred to above.