Vietnam is a perfect example of a frontier market economy. It’s still a communist country, but is making steady progress in implementing a market-based economy.
“Frontier” markets are fast-growth markets that are too small and too under-developed to be grouped with markets like China, Brazil and India. These are places with huge growth potential – as well as high volatility – but remain under most investors’ radars.
Vietnam is one of the world’s cheapest markets right now, with a market price-to-earnings (P/E) ratio of about 10. That’s pretty cheap when you compare it with India at a P/E of 22 or another pre-emerging market like Peru which is on a P/E of 55.