Securities companies "fight" to gain market share

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With the method of increasing charter capital to VND15,000 billion, SSI will continue to be the largest securities company in the market. Photo: SSI

Racing to increase capital

The stock market attracting a large number of new investors is opening up opportunities for securities companies to change their rankings in market share.

Attracting many new investors to open trading accounts will help securities companies maintain and expand their market share. Therefore, many consecutive promotions and incentives have been implemented by securities companies, from gift giving, fee reduction, even free transaction fee, reducing margin loan interest rate, and many training programs, improving knowledge for investors.

In which, there are promotions with a total prize value of up to billions of dong; Many securities companies also spend trillions of dong to deploy preferential margin packages for investors.

In particular, margin operation is one of the factors that help securities companies attract investors, especially during periods of the market boom. Accordingly, besides low lending interest rate incentives, margin resources are also a great advantage for securities companies. Therefore, a series of securities companies are implementing capital raising plans to increase this resource.

Specifically, the Board of Directors of SSI Securities Joint Stock Company has just issued a Resolution to submit to the General Meeting of Shareholders (AGM) a plan to increase charter capital to nearly VND15,000 billion through offering nearly 500 million new shares to existing shareholders.

Previously, in September 2021, SSI also issued nearly 218.3 million shares to increase share capital from equity and offered more than 109.55 million shares by the buying right of existing shareholders. Thereby, the charter capital of SSI increased to nearly VND9,848 billion.

According to a representative of SSI, this increase in charter capital is to supplement business capital, improve underwriting capacity, investment capacity and margin lending capacity. During the time when margin lending has not been used, the money will be used to invest in bonds and certificates of deposit to ensure efficient use of capital.

Similarly, Yuanta Securities Vietnam Co., Ltd (YSVN) has just been approved by the State Securities Commission to increase its charter capital from VND1,500 billion to VND2,000 billion. According to Mr. Nguyen Thanh Tung, General Director of YSVN, the increase in charter capital would help the company increase its capacity to provide more margin loans, and increasing investment in technology, system upgrades, and process improvement as well as recruiting more employees, developing new products to bring a comprehensive stock investment experience to customers.

The Board of Directors of VNDirect Securities Joint Stock Company also plans to submit to the General Meeting of Shareholders a plan to offer nearly 435 million shares to existing shareholders to supplement resources for activities including: capital for securities lending, investment in valuable papers, securities underwriting activities, and warrants issuance and distribution. Along with that, VNDirect's Board of Directors will submit to shareholders a plan to issue nearly 348 million shares to increase share capital from equity. With these two options, VNDirect's charter capital is expected to increase to more than VND12,000 billion.

According to the observation of BOS Securities Joint Stock Company, there are about 30 securities companies implementing capital increase plans with an additional capital value of VND24,399 billion, equal to 35% of the current contributed capital of securities companies.

BOS experts said that the remaining margin lending room of securities companies was quite narrow. Many securities companies were running out of margin capital, so they should raise capital to meet the increasing transaction size.

In addition, domestic securities companies are under great competitive pressure from securities companies with foreign capital. In the last three years, brokerage revenue of securities companies with foreign capital increased sharply from 4.6% to 12%.

In the list of enterprises with the largest market share on the stock exchange, there are names like Mirea Asset or KIS Vietnam. According to BOS experts, foreign securities companies had competitive advantages with large margin loans and lower interest rates than domestic securities companies. The battle for market share requires securities companies to improve their financial capacity, especially small-scale securities companies.

In addition, a series of new products and operations are being promoted by the State Securities Commission, the Stock Exchange, and the Securities Depository Center, such as selling pending securities, short selling, buying and selling securities for a day, set high requirements on financial “health” that securities companies must meet to be allowed to participate in the deployment.

After raising capital, securities companies could add resources for business activities such as margin lending, proprietary trading. These activities will help increase cash flow in the stock market, helping to make transactions on the market.

Abundant capital will also help the profit picture of securities companies. Looking back at the nine months of 2021, business results of securities companies have also shown positive growth. In which, SSI Securities Company's net profit was nearly VND1,700 billion, nearly doubling the same period last year, VNDirect's was VND1,545 billion, up 245%.

With increased resources, business results of securities companies are expected to continue to have impressive breakthroughs in the future.

The prosperity of the stock market helps the shares of listed securities companies to attract strongly cash flow in the market.

The market price of many stocks had a breakthrough and continuously set new peaks. Typically, VND shares of VNDirect Securities Company have exceeded VND70,000 per unit, nearly seven times higher than in early 2021, SSI nearly four times, SHS nearly five times, MBS four times.

Thereby, the market capitalization of these companies also recorded a strong increase, many securities companies joined the "billion dollar" club such as SSI (VND48,000 billion), VNDirect (VND33,000 billion) and VCSC (VND24,000 billion).