Japanese investors flock to Vietnam
Reuters
Published: 12/05/2007 12:00 AM (UAE)
Hanoi, Tokyo: Tada-yoshi Okimoto, an auto company executive from southern Japan, rubs shoulders with dozens of Vietnamese at a brokerage in Ho Chi Minh City, excited to get a piece of Vietnam's fledgling stock market.
Okimoto is on a tour to Vietnam's budding financial centre organised by a Japanese travel agency that brings Japanese retail investors to Vietnam to open share trading accounts. The tour is so popular with Japanese wanting to take advantage of a burgeoning stock market that it runs almost every working day.
"In many countries, the stock market is mature and goes up and down a lot. But in Vietnam, the stock is very new so the chart is going up all the time. In two or three years' time, we will receive a lot of money from our investment," Okimoto said.
Driven by low interest rates at home, Japanese investors are eyeing Vietnam, a communist-ruled country experiencing fast economic growth after starting gradual economic reforms in 1986, as an alternative to China and India.
The crowd at BIDV Securities Company (BSC) is mixed: there are men and women, the well-dressed and the shabby. The place is so full people are sitting on the floor, all eyes on the three massive screens displaying stock information.
Helping hand
To help people like Okimoto, forms are printed in Japanese and clerks speak fluent Japanese, explaining the rules of the stock market. It even operates a Jap-anese website for investors from Japan, with a $180 annual fee.
In two months' time, when officials in Hanoi have processed the application, he will receive security passcodes allowing him to start investing.
"Vietnam's economic situation is similar to China, where a communist country opens up its financial markets and tries to beef up the capital markets by joining the WTO," said Kazuo Murakami, a spokesman for Japan's Aizawa Securities Co Ltd, which sells a Vietnam fund. "It's natural for Japanese investors to apply sharp rises in Chinese stocks to Vietnamese shares."
Japanese investors are estimated to represent about five per cent of the Vietnam's 2.5-trillion yen stock markets. Foreign investors account for 20 to 30 per cent.
The flood of foreign money has helped Vietnam's main share index jump nearly 145 per cent last year and 23 per cent this year so far.
But not everything is rosy for investors.
The market is still small and the market infrastructure is in its infancy, especially the unregulated over-the-counter market, where investors may find the best bargains.
Things may change, however, as the Vietnam government has tried to rein in the unregulated market, asking companies that have sold shares on the grey market to register with regulators.
"(OTC shares) will be accessible for foreigners" after these steps, said Paul Nguyen, a director of Ho Chi Minh City-based Vinchi Capital Management which is trying to set up a Vietnam fund there.
Capital Partners Securities Co Ltd, the first Japanese broker to sell a Vietnam fund, said its clients are looking for emerging-market companies for long-term investments for retirement. "We are thinking of Kazakhstan next as we have received a lot of inquires," said Katsuyuki Ueoka, deputy vice-president, Capital Partners' product division.
