Asia Plus Securities (ASPS) recommends increasing investment in Vietnam, citing the country's high growth prospects based on its ample local workforce, low minimum wage and steadily rising per capita income.
In terms of investment risk, the brokerage points to the Russia-Ukraine conflict and sanctions against Russian crude supplies that have caused energy prices to rise and impact certain sectors disproportionately, such as the finance and consumer sectors.
The war has also impacted both the bond market and stock market but the impact has been limited.
Both markets have recovered since the initial invasion of Ukraine and the brokerage believes that the war's influence on bond and stock markets will gradually decrease, said Therdsak Thaveeteeratham, deputy managing director of ASPS.
He said to curb inflation, the Federal Reserve will likely raise short-term interest rates to decrease its balance sheet and the decline of capital in the system will directly pressure the prices of all assets, including cryptocurrencies and gold.
To avert risk, the brokerage points to investment in Vietnam because of its strongly-developing economy. The country has become more attractive to foreign investors thanks to a large working-age population and relatively low minimum wage.
ASPS said Vietnam saw its foreign direct investment rise 7.8% year-on-year in the first quarter of 2022 despite the flare-up in the pandemic as leading global corporations begin expanding into the country, including Apple, Samsung and Toyota.
Asia Plus forecasts Vietnam to have a 5-7% GDP growth until 2028, surpassing both Thailand and Singapore.
The Vietnam Stock Index has fallen only 2% since the start of the year, a relatively modest degree when compared to the S&P 500 which dropped 10%, demonstrating its steadiness despite the world's uncertainties.
The brokerage recommends the stocks of food and beverage company Masan Group (MSN VN), the real estate development group Vincom Retail (VRE VN), and the airport operator Airports Corporation of Vietnam (ACV VN).
In terms of exchange-traded funds (ETFs), ASPS recommends VN30 ETF (E1VFVN30 VN) and VFMVN Diamond ETF (FUEVFVND VN).
For the start of the second quarter, the brokerage recommends allocating over half of the portfolio to risky assets by having 45% in developed markets' stocks and 20% in emerging market stocks. ASPS recommends diversifying into alternative investments by having 10% in global property and 10% in Asia property outside of Japan, as well as low-risk assets by having 10% in global bonds and 5% in fixed income assets.