Securities companies offer up fresh capital strategies

Securities groups are being more aggressive in gaining market share

Local individual investors are still bringing in huge sums to the stock market, with the number of new open accounts hitting a record high. Data from the Vietnam Securities Depository Center revealed that domestic individual investors established 1.5 million new securities accounts, reaching an all-time high and equalling a 1.5 times higher increase in the number of new openings in the previous four years.

The Ho Chi Minh City Stock Exchange (HSX) last week officially revealed the market status for the fourth quarter of 2021 and for the whole year. VPS Securities maintained its 17.12 per cent market share in Q4 in the brokerage market share of stocks, fund certificates, and covered warrants. SSI Securities placed second with a market share of 10.28 per cent, and in third place was VNDirect Securities with a market share of 7.67 per cent, followed by HSC Securities with 5.66 per cent.

The market share of Viet Capital Securities (VCSC) fell from 4.9 per cent in Q3 to 4.37 per cent in Q4. TCBS and Mirae Asset Securities, on the other hand, both improved their positions compared to the previous quarter.

TCBS’ popularity in the bond market decreased, however, from 34.86 per cent in Q3 to 31.12 per cent in Q4. Tan Viet Securities escalated its level with a bigger slice of the customer base, from 13.48 to 20.63 per cent, propelling the company to second position. TPS of TPBank came in third with a market share of 16.45 per cent.

VPS, with a market share of 16.14 per cent for the whole year 2021, is the de facto leader in the stock brokerage landscape. Following that are the well-established brands SSI, VNDirect, HSC, and VCSC, which have a combined slice of 11.05, 7.46, 6.71, and 4.87 per cent, respectively.

In this year’s rankings, VCSC fell one place from its position in 2020. SSI was demoted one position, while HSC was demoted two positions.

Some market watchdogs believe that the aggressive “high commission” strategy of VPS, which results in a larger market share, could significantly lower the firm’s business efficiency.

One industry insider said that prominent brands such as SSI, HSC, and VCSC are “doing the right thing” when they concentrate on gaining and maintaining large clients to increase company efficiency without compromising advantages for shareholders by paying huge commissions to brokers. “It is obvious that VPS shareholders are sacrificing their economic interests in order to support the company’s plans to gain market dominance,” said the insider.

The market capitalisation of the HSX amounted to approximately $254.83 billion, which was equivalent to 92.77 per cent of GDP in 2020 as of the end of 2021.

Individual investors in the United States will create 1.5 million new securities accounts in 2021, according to the Securities and Exchange Commission. This is an all-time high and about 2.5 times more than the total number of new openings in the preceding four years combined.

According to KIS Securities, in the 2021–2022 period, the primary focus of securities businesses is on raising charter capital, thus assisting them in providing loan services and leveraging technology. The competition to boost charter capital heated up in the last months of 2021, as securities firms disclosed one by one their fresh capital expansion plans.

“The new incremental capital could place a heavyweight on the earnings per share growth in 2021-2022, where the total operating income momentum could catch up,” KIS noted.

The government’s concrete efforts in developing the equity market would be a huge boost for securities companies to thrive. The Ministry of Finance aims to concentrate on the stock market as an equity market for mid- and long-term funding, and restructuring operations in the stock market such as upgrading core systems and studying to deploy new financial products have been conducted in recent times

Meanwhile, VPBank’s Board of Directors last week authorised the bank’s investment in ASCS Securities to purchase almost 26.2 million shares, equivalent to 97.42 per cent.

Additional registrations for securities brokerage, securities trading, underwriting, and depositary activities have been made in the past few months.