Domestic firms pressurized as foreign securities companies flex capital muscles

By Minh Son   November 28, 2018 | 05:53 pm PT
Domestic firms pressurized as foreign securities companies flex capital muscles
Foreign securities companies are raising capital on a large scale. Photo by VnExpress
Vietnamese securities firms are feeling the heat as foreign peers get huge capital injections.

Mirae Asset, one of the first 100 percent foreign owned securities companies in Vietnam, was in the top 10 bracket in terms of brokerage market share at the Ho Chi Minh City Stock Exchange (HoSE) in the second quarter of 2018.

The firm has increased its capital nearly 14-fold with the backing of parent company Mirae Asset Wealth Management headquartered in Seoul, Korea over the last three years.

Mirae Asset’s chartered capital more than doubled in 2016 from VND300 billion ($12.82 million) to VND700 billion ($29.92 million). This increased further to VND2 trillion ($85.49 million) in 2017 and by mid-year 2018, had reached VND4.3 trillion ($183.79 million). 

Like Mirae, many other foreign-invested securities companies have been racing to increase their capital. KIS Vietnam which is incorporated by South Korea Investment & Securities Co., Ltd in 2010 had raised its chartered capital to VND1.9 trillion ($81.22 million) by last year-end, while Maybank Kim Eng owned by Maybank Kim Eng Holdings Ltd. of Thailand has VND1.06 trillion ($45.14 million) in chartered capital. 

Two other players, South Korean owned KB Vietnam and Taiwanese owned Yuanta, have increased their capital from around VND300 billion ($12.82 million) each in 2017 to VND1.68 trillion ($71.81 million) and VND1 trillion ($42.75 million) this year respectively. 

While the foreign securities companies are raising capital on a large scale, their domestic counterparts, though under increasing pressure to raise capital as the market continues to grow, are significantly more cautious in their expansion plans.

Last year, the Saigon-Hanoi Securities Jsc. (SHS) raised its capital from VND1 trillion ($42.69 million) to VND1.054 trillion ($45.01 million) through share swaps to merge with sister company SHBS, both owned by parent company SHB--Saigon – Hanoi Commercial Bank.

Another domestic securities company, Artex Securities JSC (ART), also plans to raise its chartered capital to VND1.46 trillion ($62.35 million) from VND372.6 billion ($15.91 million) this August. 

SSI, the player with the highest chartered capital in the market at over VND5 trillion ($213.76 million), has acknowledged that pressure on domestic securities firms will increase with the expansion of competitors with foreign capital. 

"It is crucial to attract foreign organizations to a stock market with such potential like Vietnam. But domestic firms will have to deal with the competition," said Nguyen Duy Linh, deputy director of SSI’s Personal Securities Services.

Linh said the biggest pressure will come from the need to improve the quality of products and services, as well as the pressure to improve human resources and compete for customers.

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