Garment factory employees working in a manufacturing facility in Hanoi, Vietnam on May 24, 2019.

Manan Vatsyayana | AFP | Getty Photos

SINGAPORE — Vietnam’s economic outlook is beneficial and has “large prospective,” according to UBS World Wealth Management’s Kelvin Tay.

“Vietnam is a sector that we like,” Tay, regional main investment decision officer at the agency, informed CNBC’s “Squawk Box Asia” on Wednesday.

“It truly is an financial state that we believe has large prospective,” Tay reported, adding that development in the state is “outstripping” its frontier marketplace peers.

Vietnam was one particular of Asia’s leading-carrying out economies in 2020 and amongst the few nations that managed to report progress final calendar year as authorities globally scrambled in their struggle in opposition to the coronavirus pandemic. It noticed 2.9% expansion in 2020, narrowly edged out by the Taiwanese economy’s 2.98% expansion.

In modern several years, the nation has been seen as an option manufacturing hub for corporations seeking to move manufacturing out of China to steer clear of currently being caught in the crossfire of tensions among Beijing and Washington.

The Vietnamese inventory marketplace is also observing potent advancement and is on monitor to grow to be greater than the Philippines in terms of marketplace capitalization “sometime the middle of this 12 months,” in accordance to Tay.

The VN-Index in Vietnam in the beginning noticed a strong start off to 2021 but later on fell sharply as fears of a coronavirus resurgence weighed on investor sentiment.

So much in 2021, the index has risen about 1%, as of its Tuesday near.

Continue to, Tay acknowledged that pitfalls continue to be for those people wanting to commit in Vietnam.

For starters, liquidity continues to be a problem, the chief financial commitment officer claimed.

In addition, he cautioned that Vietnamese authorities have been identified to use forex controls as a monetary coverage choice.

“If the overall economy is not performing well they’re most likely to really depreciate the Vietnamese dong sharply just to consider to stimulate the financial state,” Tay reported.

Late previous year, the U.S. Treasury Division labeled the state a forex manipulator.

“People are the sorts of pitfalls that you get when you commit in just one of the frontier markets,” Tay mentioned. “Of class, when you get your timing appropriate … Vietnam is 1 of the best doing marketplaces more than the last a few to 5 a long time.”

— CNBC’s Abigail Ng contributed to this report.

Correction: This short article was up-to-date to precisely mirror the movements in Vietnam’s VN-Index.