In movies, sequels are usually never as exciting as the first.
The same could be said about the second Trump-Kim summit, which ended on Thursday without reaching any agreement on denuclearisation or sanctions.
It’s only been eight months since U.S. President Donald Trump met North Korean leader Kim Jong-un in Singapore for the first historic summit.
This week, the two met again – this time in Vietnam, closer to Kim Jong-un’s home.
They arrived at the historic 118-year-old Metropole Hotel in Hanoi, shook hands, had the usual photo ops, and – for the first time – Kim Jong-un took questions from foreign journalists.
But the talks ended early, and both leaders walked away with little more than a fresh memory of how each other looked in person.
Still, there was one big winner from this summit. And it wasn’t Trump or Kim… It was Vietnam.
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From first world to developing world
When Singapore was chosen to host the first Trump-Kim summit, I thought it was a logical choice. It’s the role model for rags-to-riches economies that other developing nations – and perhaps one day North Korea – could look to for guidance.
Singapore’s first Prime Minister, Lee Kuan Yew, explained in his book “From Third World to First” how the country transformed itself from a malaria-infested swamp – defying all odds along the way – to become the Switzerland of Asia. (If you haven’t read his book, I highly recommend it.)
Today, Singapore is a first-world nation in every sense of the word. It ranks first in the world in terms of infrastructure. It has some of the most well-developed roads, airports and seaports. An intricate network of elevated highways and bridges, as well as limitations on privately-owned cars, also makes traffic relatively easy to navigate.
Singapore is also one of the most technologically advanced countries in the world. Its military is well-equipped with modern fighter jets (mostly U.S.-made F-15s and F-16s), tanks and attack helicopters, giving it one of the largest fighting forces in the world relative to the geographic size of the country, and its population.
So from a security and logistics standpoint, it made sense to hold the summit in Singapore.
Vietnam, on the other hand, is an emerging market. It has a long way to go before reaching the level of development Singapore has.
In terms of infrastructure, it ranks 75th in the world – right between Iran and Armenia. Traffic is horrible, particularly in downtown Hanoi and Ho Chi Minh, where motorcycles (including scooters) still outnumber cars 22-to-1.
And Vietnam isn’t exactly the safest country in the world.
It ranks 70th among the world’s safest countries, according to UL Safety Index, a data science initiative intended to increase the global awareness of health, security, sustainability and safety through information, dialog and collaboration. (Singapore ranks 12th.)
But Vietnam also has a lot going for it.
The country is friendly with both the U.S. and North Korea… it has U.S. and North Korean embassies… and it’s considered “neutral” territory for both countries.
It’s also one of Asia’s fastest-growing economies.
After nearly a dozen years of GDP growth averaging 6.2 percent a year, the skyline of Hanoi (the capital of Vietnam) is starting to look more like Bangkok.
For comparison, the U.S. economy has grown by only 1.6 percent, on average, over the past 12 years.
Meanwhile, Vietnam real estate is booming and construction is going at a frenzied pace. In Ho Chi Minh, its largest city, the number of apartments sold in 2017 grew 44 percent and the number of townhouses and villas sold increased 25 percent.
Trade between the U.S. and Vietnam has also been growing nonstop. So much so that the annual U.S. trade deficit with Vietnam has ballooned from US$453 million in 2000 to nearly US$40 billion as of last year.
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Hosting the summit could be good for Vietnam
It’s difficult to say if hosting the summit generated any substantial economic benefits for Singapore.
As the world’s most trade-dependent nation, Singapore couldn’t escape the fallout from the ongoing U.S.-China trade war.
But as an emerging market, Vietnam has more to gain than Singapore from the media exposure of an event as high-profile as the Trump-Kim summit.
It gives Vietnam a chance to showcase its economic success (the economy grew at around 7 percent last year and it’s going to be one of the fastest-growing economies in the world for the next 30 years) and has brought it front and centre in the geopolitical stage – which could help it attract foreign investment.
And while nothing’s for certain, hosting the summit could keep Vietnam out of Donald Trump’s trade war for the time being.
Vietnam’s stock market is recovering
Vietnam’s stock market has been one of the biggest losers from the U.S.-China trade war.
Vietnam is still down 16 percent since the first round of tariffs were fired off by Trump last March 22, 2018.
But with hopes that the trade war might soon be coming to an end (Trump recently extended the trade war ceasefire past March 1), global markets have been moving higher.
As you can see in the table above, China’s Shanghai Composite Index has been the biggest winner from easing trade tensions, it’s up 21.1 percent so far this year.
Vietnam has also managed to post a solid 10.6 percent gain so far this year. Thailand, a close neighbour of Vietnam and China, has also gained 10.8 percent this year.
But media exposure from the summit could help bring Vietnam’s growing economy to the attention of investors, and become one of the best-performing markets this year.
So the one thing you need to takeaway from the Trump-Kim summit is that Vietnam is a country ripe for investment. It’s seeing big economic growth… real estate and construction is booming… demographics is on its side… and its market could be headed higher this year.
So if Vietnam isn’t already on your investing radar, it should be.
Editor, Stansberry Pacific Research