Changes in Vietnam IPOs will trigger stronger foreign capital inflows: JICA expert
Kojima Kazunobu, a consultant of the Japan International Cooperation Agency (JICA), offers insights into the appetite of foreign investors, including Japanese ones, on the Vietnamese stock market, including initial public offerings (IPOs).
He was speaking on the sidelines of the launching seminar of the technical cooperation project “Capacity building on promoting efficiency of Vietnamese equity market” between JICA and the State Securities Commission of Vietnam (SSC) on Monday.
This project follows the JICA's "Project for capacity building on improving fairness and transparency of Vietnamese equity market" implemented from 2019 to 2023.

Kojima Kazunobu, a consultant of JICA, speaks to reporters in Hanoi, September 22, 2024. Photo courtesy of JICA.
What aspects of the market does this project focus on?
This project has three main areas. The first is "strengthening market surveillance capacity," which aims to strengthen the detection, management, and prevention of unfair trading by securities authorities and exchanges.
The second is "improving and developing the quality of market intermediaries." Market intermediaries refer to securities companies and fund management companies.
The third is "improving capacity in managing public offerings and listings." This includes public offerings according to international standard methods (underwriting/book building), strengthening listing standards and examination, and strengthening disclosure, including non-financial information of listed companies.
Could you tell us about the difficulties in implementing the first phase of the project and the results achieved by the previous project?
The biggest challenge of the previous project, which was implemented from April 2019 to March 2023, was that face-to-face activities were not possible from early 2020 to August 2022 due to the impact of Covid-19.
As a result, most of the project period was conducted online, and I believe that the expected results in terms of hands-on support such as improving business flow were not achieved.
However, on the other hand, we focused resources on online activities and carried out a variety of activities, including advising on the drafting of decrees and circulars related to the Securities Law 2019, policy dialogue with senior officials from the Financial Services Agency to formulate the "Securities Market Development Strategy for 2030," online seminars for listed companies attended by nearly 600 companies, and dozens of lectures featuring active practitioners from the Financial Services Agency, SESC, JPX, and the JSDA.
These diverse activities generated great results in terms of providing knowledge of equity capital markets in Japan and around the world.
What are the biggest expectations for the cooperation project between the SSC and JICA given the Vietnam Stock Market Development Strategy to 2030?
It would be great if the two SSC-JICA projects (the previous project implemented from 2019 to 2023 and this new project) could contribute to upgrading the Vietnamese market to an "emerging market" status and its integration into the international capital market.
Looking towards 2030, I think it would be a great achievement if we could advance the "strengthening of the primary market in line with international equity capital market standards" and "utilization of effective self-regulatory organizations," as recommended in the previous project.
When do you expect the Vietnamese stock market to have its status upgraded, and what impact will this event have?
Regarding this issue, I am aware that the Vietnamese authorities are actively implementing measures, such as repealing pre-funding rules for foreign investors, with the aim of upgrading by 2025. They are engaging in dialogue with MSCI and FTSE as well as campaigning in Singapore and Japan.
I hope that Vietnamese authorities will continue to implement measures to address the issues raised through dialogue with MSCI and FTSE, and that an upgrade to the government's rating in 2025 will be realized.
What are your expectations for this project regarding benefits for foreign investors, including those from Japan?
This project has three major themes: "Strengthening market surveillance," "Improving and developing the quality of market intermediaries," and "Improvements in public offerings and listings in line with international standards."
Regarding the third of these, "Improvements in public offerings and listings in line with international standards," it is expected that may lead to significant future change that is favorable for foreign investors if progress can be made in discussions to shift Vietnam's current IPOs, which are conducted by auction, to an underwriting and book building method in which IPOs are launched simultaneously with listing approval.
If this can be achieved, foreign investors, including Japanese investors, will be able to invest in attractive newly listed stocks from the IPO stage, which is expected to increase their investment opportunities in Vietnamese stocks dramatically.
How interested are Japanese investors in the Vietnamese stock market? What improvements do Vietnamese stocks need to make to attract more foreign capital?
There is potentially a lot of interest from foreign investors including Japanese investors in the Vietnamese stock market. If large companies and emerging companies with investment appeal raise funds through IPOs and go public, a large amount of foreign funds will flow in.
Unfortunately, IPOs and new listings on the Vietnamese stock market have been stagnant in recent years.
In addition, the best opportunity for foreign investors to invest in Vietnamese stocks is to participate in an IPO. Still, Vietnam's current IPOs by auction make it difficult for them to participate. In this regard, it is hoped that an IPO method compatible with international standards such as underwriting/book building will be established.
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