Foreign finance groups have recently poured trillions of Vietnamese dong into their securities subsidiaries in Vietnam, helping them enlarge market share rapidly and become big players in the local market.

Foreign securities expect to join the local fruitful derivatives market

Backed up by huge financial resources and specific customer segments supported by parent groups, foreign securities companies in Vietnam such as Mirae Asset, Maybank Kim Eng, KIS Vietnam, KB Vietnam and Yuanta, are emerging as redoubtable competitors of local securities brokers.

Recently, Mirae Asset, which has been one of the first fully foreign-owned securities companies set up in Vietnam in 2007, has for the first time entered the top 10 securities companies in terms of market share on the Ho Chi Minh City Stock Exchange (HoSE) in the second quarter of this year.

The achievement has come after many capital hike of Mirae Asset in recent years. With supports from its parent group Mirae Asset Wealth Management, Mirae Asset has increased its charter capital by 14 times, from VND300 billion (US$12.82 million) in 2007 to VND700 billion (US$29.78 million) in 2016, VND2 trillion (US$85.1 million) in 2017 and VND4.3 trillion (US$182.98 million) in mid-2018.

Thanks to the capital hike, Mirae Asset has become the second largest securities firm in Vietnam just behind Saigon Securities Incorporation, whose charter capital is currently at more than VND5 trillion (US$212.76 million).

Similar to Mirae Asset, numerous other foreign-owned securities companies in Vietnam have also increased their charter capital in recent years. KIS Vietnam has raised its charter capital by VND784 billion (US$33.36 million) to nearly VND1.9 trillion (US$80.72 million), while Maybank Kim Eng and Shinhan Vietnam have also raised its capital to VND 1.056 trillion and VND812 billion, respectively.

KB Vietnam has recently been approved to increase charter capital from VND300 billion in late 2017 to VND1.680 trillion.

Yuanta Vietnam has also planned to increase charter capital 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).

Joining potential market segments

The capital increase is not immediately reflected in the business results of the foreign securities companies, but instead it helps the companies be entitled to join the new and potential market segments, such as derivatives and covered warrants.

KIS Vietnam and Mirae Asset, after raising charter capital above the required limit, have become two of the 12 official members on the derivatives market of the Hanoi Stock Exchange (HNX). These positive developments are the reason for experts to hold that the pressure is high for local securities companies.

Though being the leading broker in the Ho Chi Minh City Stock Exchange for 19 consecutive quarters with a 23.08 percent brokerage market share by the end of the second quarter this year, Saigon Securities Incorporation (SSI) admitted the competition in the local market is becoming fiercer.

Deputy Director of SSI’s securities services division Nguyen Duy Linh said that the pressure for domestic securities companies will increase along with the expansion of foreign-owned securities ones. The pressure comes from the requirements to improve the quality of product and services, human resource, and especially the competition in increasing market share.

However, Linh said, SSI doesn’t see it a challenge but a chance for local securities companies to improve itself.

Hanoitimes