The Shanghai A-Share Index shows no end in sight to the precipitous drop in Chinese stocks. The Chinese stock market is a deflating bubble. Why anybody would be so bullish on China in the first place is a mystery to me.

Most Chinese companies are low-end manufacturing businesses that prosper primarily because the labor is cheap and the yuan is undervalued. There are no sustainable competitive advantages here, and few, if any, Chinese companies have pricing power. Low-end Chinese manufacturing companies compete primarily on cost.

Investors have wondered where to invest outside the United States. Some countries of interest are China, Vietnam, Argentina, and Colombia. And many have looked to China, but there are many more attractive emerging markets to invest in than China. Some other countries of interest are Vietnam, Argentina, and Colombia.

Emerging Opportunities

Like China, Vietnam is also in the midst of a depression-era bear market. The Ho Chi Minh stock market is the worst-performing stock market this year, down a stunning 55% in just six months. Vietnam's economy is overheating. Auto sales are up 168% so far in 2008, inflation is running at 25%, the current-account deficit is swelling, and, as a result, the Vietnamese dong is diving versus the U.S. dollar. Foreign speculators who pumped up Vietnamese stocks to unsustainable levels just last year are now dumping shares.

Vietnam

Notwithstanding the massacre in the Ho Chi Minh stock market, Vietnam offers considerably more promise than China. Vietnam is also a source of low-end manufactured goods. Low-end manufacturing is a commodity-oriented business where the low-cost provider wins. If you are going to invest in low-end manufacturing…