The Hanoitimes - Besides buying shares of Vietnam’s large securities companies, foreign investors have also poured significantly in domestic small securities companies through merger and acquisition (M&A).
Good business performance has made local securities companies more attractive to foreign investors and many of the companies have decided to scrap the foreign holding cap to capitalize the inflow.
Saigon Securities Inc. reported strong growth in the three quarter of 2018, with profit and revenue surging of 57.9 percent and 55 percent against the same period last year to VND1.41 trillion (US$60.25 million) and VND3.064 trillion (US$130.94 million) respectively. .
SSI’s profit surged sharply by 57.9 percent to VND1.41 trillion in nine months 2018
With such results, SSI shares have been attractive to foreign investors. Despite a net foreign withdrawal in the local securities market in recent months, foreign investors net bought a total of 25.6 million SSI shares worth VND939 billion (US$40.13 million) as of November 12.
With impressive revenue and profit of VND1.95 trillion and VND753.4 billion in the first nine months of the year, a year-on-year surge of 2.24 fold and 64.4 percent, respectively, Ho Chi Minh City Securities Company (HCM) also lured foreign investors, who net bought some 5.3 million HCM shares as of November 12.
The net buying trend was also seen at some other local top securities companies. Foreign investors net bought more than 3.6 million shares worth over VND276 billion and 10.1 million shares worth VND163.3 billion of Viet Capital Securities Co. and Saigon Hanoi Securities Inc., respectively.
According to the Hanoi Stock Exchange, total post-tax profit of 72 securities companies reached VND2.14 trillion (US$92 million) in the third quarter of this year, up 59 percent quarter-on-quarter.
The number of profitable securities companies and value of profits increased over the previous quarter as well as against the same period last year. The third quarter had 56 profitable securities companies, up by 11 compared with the previous quarter.
The surge in those companies’ profit was mainly due to strong reductions in operating expenses, according to HNX. The total operating expenses of those securities companies in the third quarter was VND3.06 trillion, down 33 percent quarter on quarter and 6 percent year-on-year. Cost for production and business dropped by 45 percent to VND1.83 trillion against the previous quarter.
According to the current legal regulations, the securities sector isn’t restricted to foreign ownership ratio so that many securities companies, such as SSI, HCM, FPT Securities Co and Investment Vietnam Securities have completely opened foreign rooms to 100 percent to be able to lure more foreign capital.
Besides buying shares of Vietnam’s large securities companies, foreign investors have also poured significantly in domestic small securities companies through merger and acquisition (M&A). Notable cases include South Korea’s KB Securities acquiring Maritime Securities Co and Taiwan’s Yuanta Securities Asia Financial Services Ltd acquiring First Securities Co.
After the M&A deals, foreign investors have also planned to increase their charter capital in the securities companies, confident that the domestic stock market still has a lot of room for expansion in the future.
Yuanta Securities Asia Financial Services Ltd for example expected to increase the 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).
According to Le Minh Tam, president and CEO of Yuanta Vietnam, his company has planned to increase the capital since early this year and the rise is just the beginning of the company’s long-term commitment in the Vietnamese market.
With the tremendous experience and advantages of parent company Yuanta Group, Yuanta Vietnam has a strategic direction to participate in the provision of new products to the Vietnamese market such as derivatives, Tam said.
Tam also anticipated that the stock market would continue to grow in the time ahead so the demand of investors will increase.