Japanese investors see Vietnam as a sure bet
HANOI - Tadayoshi Okimoto, an auto company executive from southern Japan, recently met with dozens of Vietnamese in Ho Chi Minh City, excited by the chance to get a piece of Vietnam's nascent stock market.
Okimoto was on a tour, organized by a Japanese travel agency, that brings Japanese retail investors to Ho Chi Minh City, Vietnam's budding financial center, to open share trading accounts. The tour is so popular with Japanese who want to take advantage of a growing stock market that it takes place almost every business day.
"In many countries, the stock market is mature and goes up and down a lot," Okimoto, 41, said. "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."
Driven by low interest rates at home, Japanese investors are eyeing Vietnam, a Communist-ruled country that is now experiencing fast economic growth and recently joined the World Trade Organization. The Japanese see Vietnam as an alternative to China and India.
To help people like Okimoto become investors, forms are printed in Japanese and clerks who speak fluent Japanese explain the rules of the stock market. There is even a Japanese-language Web site for investors, with an annual fee of $180.
Okimoto said he had spent ¥60,000, or $500, on the trip, including airfare and accommodation for two nights. "It's very cheap compared to the returns that could be offered," he said.
In two months, after officials in Hanoi have processed his application to trade, he will receive security codes that will allow him to start investing.
For those who do not make the trip to Ho Chi Minh City, funds that invest in Vietnam are available in Japan. They have attracted ¥80 billion, which is more than funds that invest in Brazil.
"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 Aizawa Securities, which sells a Vietnam fund in Japan, said. "It's natural for Japanese investors to apply sharp rises in Chinese stocks to Vietnamese shares."
Including direct investments through private accounts and money invested in Vietnam funds, Japanese investors are estimated to represent about 5 percent of Vietnam's $20 billion stock market. Foreign investors account for 20 percent to 30 percent of all investors.
The flood of foreign money has helped Vietnam's main share index jump nearly 145 percent last year and 23 percent so far this year.
Nearly 200 companies are listed on the country's two exchanges, and the government is scheduled to fully or partially privatize 550 businesses this year.
Among those going private are Vietindebank, a large state-run bank; Vinaphone, the nation's largest mobile phone service provider; and Bao Viet, Vietnam's largest insurance firm.
But not everything is positive for investors. The market is still small and its infrastructure is in its infancy, especially that of the unregulated over-the-counter market, where investors may find the best bargains.
"The shares on the unregulated OTC are the ones we really want," said Masaki Takahashi, senior strategist at the Asia information division of Okasan Securities in Tokyo. "The problem is that there will be stocks whose accounting and financial information will not be transparent and will not meet Japanese standards."
Things may change, though. The Vietnamese government has tried to rein in the unregulated market, asking companies that have sold shares on the gray market to register with regulators.
Capital Partners Securities, the first Japanese brokerage to sell a Vietnam fund, said its clients are looking for emerging-market companies in which to make long-term investments for retirement.
"We are thinking of Kazakhstan next, as we have received a lot of inquiries," said Katsuyuki Ueoka, a deputy vice president at Capital Partners.
By Nguyen Nhat Lam & Eriko Amaha - Reuters - May 8, 2007.
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