Japanese investors upbeat about prospects in Vietnam

Tokai Tokyo and Bao Viet Securities will assist Japanese investors in entering the Vietnamese market

Tokai Tokyo enters Vietnam

According to the Ministry of Finance (MoF), Japanese investors take up 33 per cent of the 21,800 accounts owned by foreigners in the Vietnamese stock market. This figure shows that Japanese investors pay much stronger attention to Vietnam than other foreigners.

However, disbursements still remain modest in terms of strategic investments and share transactions. MoF reckons that Japanese investors tend to be cautious with their capital, and confidence in the Vietnamese market is still lacking.

Tateaki Ishida, CEO and president of Tokai Tokyo Financial Holdings, said that the corporation has 127 transaction offices and subsidiaries across Asia, Europe, and the US.

Prominent clients and shareholders include The Bank of Tokyo-Mitsuhishi UJ, Ltd., Toyota Financial Services Corporation, Nippon Life Insurance Company, and Mitsui Sumitomo Insurance Co., Ltd.

Tokai Tokyo has spent the previous year examining the potential of doing business in Vietnam, Ishida said. Based on rigorous research, Tokai Tokyo Financial Holdings, especially its subsidiary Tokai Tokyo Securities, has decided to venture into the country.

Ishida and the team have arrived to Vietnam to learn more about the country and sign the cooperation agreement with Bao Viet Securities (BVSC). The deal includes a partnership in investment banking, M&A, product development, and training.

“BVSC is the gateway for Tokai Tokyo to understand the Vietnamese stock exchanges, listed businesses, and investors. We hope that BVSC will be a helpful consultant for us in Vietnam,” said Ishida.

The Japanese CEO added that Tokai Tokyo chose BVSC over various other firms because Bao Viet Holdings, the parent company of BVSC, has struck a range of deals with Japanese partners, such as Sumitomo Life and Tokio Marine Insurance Group. Bao Viet Holdings have also paid generous dividends, between 8 and 15 per cent, to its shareholders.

“We have not decided on what to invest in Vietnam yet. We need more time to learn about the Vietnamese market and its opportunities. Partnering up with BVSC is the first step for us,” said Ishida.

Key concerns: transparency and communication

In Japan, Tokai Tokyo is a major financial group listed among the top 10 in terms of revenue and profit (following Normura, Mizuho, Daiwa, and SMBC Nikko among others).

Nhu Dinh Hoa, CEO of BVSC, noted that after signing the contract with Tokai Tokyo, the brokerage will continue to work out the details of cooperation and find the most suitable opportunities for Japanese investors. In reality, many Japanese investors already have an account at BVSC, but the activities remain modest.

Hoa expressed hope that following the handshake with Tokai Tokyo, BVSC will enjoy a new advantage in finding international customers.

Unlike many other investors, Japanese firms tend to be more careful when investing in a company and often aim at a long-term relationship. In 2012, Mizuho bought 15 per cent of the shares at Vietcombank, and Bank of Tokyo-Mitsubishi UFJ also purchased 20 per cent of Vietinbank a year later. As of now, both shareholders keep their stakes at the Vietnamese banks and expressed a wish to continue the partnership.

More recently, ANA Nippon Airways bought 8.77 per cent of Vietnam Airlines and JX Nippon & Energy bought 10 per cent of Petrolimex. Some transactions took five years to finalise, but when two partners have decided to ink a deal, the Japanese side seldom withdraws or sells the shares for simple profit.

Last month, MoF organised an investment forum for Japanese investors. Held in Tokyo, the forum has attracted various institutional investors, who told Minister of Finance Dinh Tien Dung that the most important criteria for investment in Vietnam are transparency and discipline.

At the forum, many investors also claimed that they wanted to capitalise on Vietnam’s high growth. However, they are still concerned that the financial reports of Vietnamese businesses remain subpar to international standards.

“Companies in Vietnam should be more transparent and follow global accountancy standards. They should also release information frequently, both in Vietnamese and English. If Vietnam can do this, capital from Japan will definitely follow,” said a Japanese investor.

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