FEATURE-Japanese investors get Vietnam fever http://www.reuters.com/article/bankingfinancial-SP-A/idUST31869720070511
Mon May 7, 2007
By Nguyen Nhat Lam and Eriko Amaha
HANOI/TOKYO, May 7 (Reuters) - Tadayoshi 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 center 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, 41, 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.
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 Japanese Web site for investors from Japan, with a $180 annual fee. Okimoto says he spent 60,000 yen ($500) for his 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 time, when officials in Hanoi have processed the application, he will receive security passcodes allowing him to start investing.
In addition to Sketch Travel, the group that organised Okimoto's tour, HIS Co. Ltd. (9603.T: Quote, Profile, Research and other travel agencies are now arranging similar tours. At the Ho Chi Minh branch of BSC, foreign investors held 618 accounts at the end of March, about 5 percent of the total.
MONEY TO BE MADE
For those who don't make the trip, Vietnam funds are available in Japan, and have been snapped up to the tune of 80 billion yen, more than for funds investing 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 Japan's Aizawa Securities Co. Ltd. (8708.Q: Quote, Profile, Research, which sells a Vietnam fund. "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 the Vietnam's 2.5 trillion yen stock markets. Foreign investors account for 20 to 30 percent.
CAVEAT EMPTOR
The flood of foreign money has helped Vietnam's main share index (.VNI: Quote, Profile, Research jump nearly 145 percent last year and 23 percent this year so far.
Nearly 200 companies are listed on Vietnam's two exchanges, and the government is scheduled to fully or partially privatise 550 businesses this year.
Among those going private are Vietindebank (BIDV), the third-largest state-run bank in terms of assets, Vinaphone, the nation's largest mobile phone service provider, and Bao Viet, Vietnam's largest insurance firm. 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.
"The shares on the unregulated OTC are the ones we really want ... the problem is that there will be stocks whose accounting and financial information will not be transparent and will not meet Japanese standards," said Masaki Takahashi, senior strategist at the Asia information division of Tokyo-based Okasan Securities Co. Ltd., a unit of Okasan Holdings Inc. (8609.T: Quote, Profile, Research
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.
"There is no regulation in the OTC market at all ... most people change shares by going through the Internet or going through unofficial brokers." 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.
(additional reporting by Hanoi Newsroom and Michiko Iwasaki in Tokyo)
((Writing by Eriko Amaha, editing by Eddie Evans; Reuters messaging: eriko.amaha.reuters.com at reuters.net; +81 3 3432 8969))
($1=118.46 Yen)
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