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Foreign Investors: Saviors of Vietnamese Banks, Vietnam ETF?

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The country's banks are seeing soaring debt levels and a government crackdown on corruption.

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In late December, Japan's Mitsubishi UFJ, that country's largest bank, announced a $743 million deal to acquire 20% of Vietnam Joint Stock Commercial Bank for Industry and Trade, or VietinBank. The State Bank of Vietnam will remain the majority owner of VietinBank, but the deal shows Vietnam is warming to outsiders owning large slices of its financial services firms.

In the Asian News Network interview, Binh noted, "The most fundamental factors [for attracting capital] are still the business efficiency of companies, economic stability, and investor psychology." With Vietnam, those points ring especially true given the country's reputation for corruption and a long-slumping equity market.

On the upside, should Vietnam proceed with opening its banks to increased foreign investment, the bull case for VNM becomes all the more compelling. As it is, the ETF carries a a P/E ratio of 9.29, a price-to-book ratio of just 1.15, and a dividend yield of 3.33%.

Those numbers indicate VNM is inexpensive relative to the broader emerging markets universe as represented by the iShares MSCI Emerging Markets Index Fund (NYSEARCA:EEM). VNM's dividend yield is far higher than EEM's and the former's price-to-book ratio is less than half of the latter's. EEM trades with a P/E of 17.31, according to iShares data.

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