Foreign securities companies gear up to expand operation in Vietnam

Foreign securities companies gear up to expand operation in Vietnam

Many foreign securities companies in Vietnam have recently announced plans to increase their charter capital, confident that the domestic stock market still has a lot of room for expansion in the future.

The most impressive plan has come from Mirae Asset Vietnam (MASVN). After completing the capital hike from VND700 billion (US$29.78 million) to VND2 trillion (US$85.1 million) last year, MASVN has recently continued approving a plan to raise charter capital to VND4.3 trillion (US$182.98 million).


Once fulfilling the plan, MASVN would be the second largest securities in Vietnam just behind the Saigon Securities Incorporation (SSI), whose charter capital is currently more than VND5 trillion (US$212.76 million).

 

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Another case is Yuanta Vietnam, which has recently released a decision on the distribution of nearly 34.5 million shares that Yuanta Securities (Hong Kong) Co Ltd and Nguyen Thi Minh Duc did not buy when the company issued shares to existing shareholders. Under the proposal, Yuanta Vietnam’s parent company -Yuanta Securities Asia Financial Services Ltd - will buy the shares.


If the plan gets approval from the State Securities Commission, Yuanta Vietnam would complete the charter capital hike from VND700 billion (US$29.78 million) to VND1 trillion (US$42.55 million), becoming one of the 18 brokerage houses in Vietnam with charter capital exceeding the threshold of VND1 trillion (US$42.55 million).


Once the capital increase plan wraps up, Yuanta Vietnam can  expand its brokerage services to cover derivative products, which under the current regulation require charter capital of securities companies be from VND900 billion (US$38.29 million).


Earlier, KIS Vietnam has also raised its charter capital by VND784 billion (US$33.36 million) to nearly VND1.9 trillion (US$80.72 million) while Shinhan Vietnam has also raised its capital from VND666.6 billion to VND812 billion.


Enlarging market share


Analysts say that foreign securities companies are nurturing ambitious plans when they raise their charter capital.


As for MASVN, for example, the charter capital hike has helped it significantly improve the competitiveness and enlarge market share. After the capital hike last year, the company has sharply increased its lending for margin trading from only VND273 billion (US$11.61 million) at the beginning of 2017 to VND1.84 trillion (US$78 million) by June 30, 2018.


According to Le Minh Tam, president and CEO of Yuanta Vietnam, his company has planned to increase the capital since early this year and the rise is just the beginning of the company’s long-term commitment in the Vietnamese market.


With the tremendous experience and advantages of parent company Yuanta Group, Yuanta Vietnam has a strategic direction to participate in the provision of new products to the Vietnamese market such as derivatives, Tam said.


Tam also anticipated that the stock market would continue to grow in the time ahead so the demand of investors will increase.


According to industry insiders, steady economic growth and accelerated privatization of state-owned enterprises as well as their plans to divest from non-core businesses will release more quality products into the market, attracting both domestic and foreign investors.


Kang Moon Kyung, MASVN general director, said that many foreign investment funds managed by Mirae Asset, KITMC, and FIDES have just increased their investment in Vietnam thanks to Vietnam's GDP high growth and the successful efforts of SOEs to divest state’s capital.


To date, the brokerage market share is still controlled by Vietnamese foreign securities companies thanks to their advantage of deep understanding about the domestic market, but experts say that foreign securities companies with huge charter capital will be tough rivals in the market, explaining that with parent shareholders being large financial corporations in developed countries, the companies will have advantages of cheap capital, large capital size, technology and governance.

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