Written by Rebecca Lipman

A relatively ignored country as far as international markets go, Vietnam has had a surprising, almost Jeremy Lin-esque performance in 2012. Better yet, it may still have more growth to price in.
"Buy now or be sorry," writes Louis Basenese of Wall Street Daily, in reference to the Vietnamese market.

Basenese explains that Vietnam has a lot of promising characteristics. Its minimum wages are well below that of China, making it a hub for manufacturing jobs for Chinese and U.S. companies. Its inflation rate is also on the decline. What's more, "almost 50% of Vietnam's 87 million people under the age of 25. So its workforce is more than capable of handling those new manufacturing jobs."

While most other frontier markets have struggled in 2012 ("The MSCI Frontier Markets index is only up 2.8% compared to an 11% rise for the MSCI All-Country World Index."), Vietnam's Ho Chi Minh Stock index is up 20.1% so far this year.

Diversifying with Pre-Emerging Markets
Vietnam is a "pre-emerging," or frontier, market. These are normally associated with higher risk, political instability and poor regulation. But Pre-emerging markets could be turning a new leaf.

"Over time these markets change, becoming more liquid and less risky. And many investors don't realize that if we add exposure to frontier markets to our portfolio before these changes firmly take root, we benefit."

Frontier markets also have low correlation with developing markets, providing more diversification to a portfolio. "Remember, even when things are good at home, we need to be scouring the world for opportunities."

Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below.

Business Section: Investing Ideas
Basenese recommends Market Vectors Vietnam ETF (VNM) as an easy and efficient way to gain exposure to 34 leading Vietnamese companies. Other popular ETFs with exposure to pre-emerging markets include:

Market Vectors Africa ETF (AFK)
Market Vectors Egypt Index ETF (EGPT)
iShares MCSI South Africa Index (EZA)
PowerShares MENA Frontier Countries (PMNA)

Prefer to stick with the emerging markets instead? We ran a screen on BRIC (Brazil, Russia, India, China) stocks, with market caps above $50 million for bullish sentiment from institutional buyers in the current quarter. We further looked for short covering month-over-month; a signal that short sellers think these stocks have some upside to price in.

Do agree with their bullishness? (Click here to access free, interactive tools to analyze these ideas.)

1. Home Inns & Hotels Management Inc. (Nasdaq: HMIN): Develops, leases, operates, franchises, and manages a chain of economy hotels in the People's Republic of China. China. Net institutional purchases in the current quarter at 3.7M shares, which represents about 15.3% of the company's float of 24.19M shares. Shares shorted have decreased from 5.84M to 5.13M over the last month, a decrease which represents about 2.94% of the company's float of 24.19M shares.

2. LDK Solar Co., Ltd. (NYSE: LDK): Engages in the design, development, manufacture and marketing of photovoltaic (PV) products; and development of power plant projects. China. Net institutional purchases in the current quarter at 2.5M shares, which represents about 3.97% of the company's float of 63.05M shares. Shares shorted have decreased from 23.43M to 20.90M over the last month, a decrease which represents about 4.01% of the company's float of 63.05M shares.

Disclosure: Kapitall's Rebecca Lipman does not own any of the shares mentioned above.