Small securities companies compete for market shares

28-Jul-2018 Intellasia | NDH | 6:02 AM Print This Post

According to the State Securities Commission (SSC), liquidity in the stock market in recent months has declined. However, the average trading volume in the first half was still high at over eight trillion dong per session, up 60 percent over the average level of 2017.

By the end of June, the market capitalisation was nearly 3.89 quadrillion dong, up 10.7 percent from the end of 2017 and equivalent to 77.7 percent of GDP. The bond market had listed value of 1.06 quadrillion dong, up four percent compared with end of 2017 and equivalent to 21 percent of GDP. The total trading volume reached over 10 trillion dong per session, an increase of 19 percent compared to the average of 2017.

The derivatives market continued to maintain steady growth, with average contract volume growth of 48 percent. For the first six months of 2018, the average trading volume reached over 45,000 contracts per session. So far, more than 35,000 derivatives trading accounts have been opened, twice of that by the end of 2017.

The figures show that Vietnam’s stock market, despite of fluctuations, still achieved growth. With the increasing size and value of trading in capital markets, profit of the stock market is also increasing.

Nonetheless, the market shares in this sector are more concentrated with the advantage towards the top ten securities companies with the largest market shares.

On the Hochiminh City Stock Exchange (STC), the top ten securities companies accounted for 72.17 percent brokerage market share in the first half of 2018, continuing to increase compared with nearly 70 percent of the same period last year.

It is notable that the top four companies had strong market share growth. Typically, market share of Saigon Securities Inc. (SSI) increased from 14.85 percent in the same period last year to 20.91 percent in the first six months of this year, or that of Hochiminh City Securities Corporation (HSC) also rose from 9.87 percent to 11.73 percent.

The same is happening on the Hanoi Stock Exchange (HNX) with the total market share for listed stocks brokerage of the top 10 to account for 69.39 percent. The other companies shared the remaining 30.61 percent of the market share.

Reporting about the management and restructuring of securities companies in the first half, SSC said it terminated operations of one Securities Company, is carrying out dissolution procedures for another one, merging two securities companies, and suspended brokerage business of one company. There are 77 securities companies operating normally, down 27 percent.

While leading securities companies such as SSI, HCM and VCI still posted impressive growth, the remaining 67 companies struggled to compete for market shares of less than 30 percent, indicating fierce competition and lots of difficulties for small securities companies. Typically, Vietnam Industrial and Commercial Securities Corporation (VIG) reported a loss of 179 million dong in the second quarter as brokerage revenue declined by half compared to the same period last year. Currently, the company still has accumulated loss of 142 billion dong; or Dai Viet Securities (DVSC) reported a decline in revenue and loss after tax in the second quarter of 2.6 billion dong. In the first six months of 2018, DVSC’s profit was only about 460 million dong, down 97.5 percent. The company also has accumulated loss of more than 71 billion dong.

Financial statement of parent company ACB Securities (ACBS) showed a loss of more than 17 billion dong in Q2/2018, while in the same period last year, the company’s after tax profit was nearly 52 billion dong. Accumulated profit for the six months was 46.5 billion dong, but decreased 41 percent over the same period last year.

The stock market is getting bigger and bigger, and new products bring many business opportunities for securities companies. However, limited capital scale, not being recognised has caused many small companies to fall into difficulties.

To be competitive, many securities companies have constantly restructured and raised capital to participate more deeply in the market. This may be a good strategy for small companies to improve their competitive advantage and gain their market share in the future. Typical examples include Maybank Kim Eng Securities (MBKE) which raised capital to one trillion dong to provide various financial products, including covered warrant. Vietnam Investment Securities (IVS) wants to raise capital from 340 billion to 1.5 trillion dong to participate in derivatives trading and some other securities business. Global Securities (VinaGlobal), inspite of suffering from losses in the second quarter of 2018 and still having accumulated losses, also plans to raise capital from 35 billion to 1.035 trillion dong. Everest Securities (EVS) is planning to raise capital from 600 billion to one trillion dong this year and further increase to three trillion dong by 2020.

 


Category: Stocks, Vietnam

Print This Post