Securities firms urged to upgrade strategies
Securities firms urged to upgrade strategies
Securities firms operating in Vietnam’s highly profitable brokerage services sector catering to international clients and institutional financiers must elevate their service standards to attract discerning clients, as intensified competition necessitates enhancing capabilities to meet the demands of foreign investors.
As per KBSV Securities, the long-term prospects of the Vietnamese stock market are promising due to sustained growth in the middle class. Furthermore, the influx of foreign funding, together with attractive price-to-equity ratio, makes Vietnam highly appealing to foreign investors, offering securities firms a ripe environment to thrive in this segment.
Thieu Thi Nhat Le, CEO of UOB Asset Management Vietnam, stated, “The State Bank of Vietnam has lowered the benchmark interest rates to propel economic growth and also indicated the possibility of further interest rate cuts in the foreseeable future. If the interest rate landscape continues on a downward trajectory, it will serve as a formidable impetus for capital inflows to re-enter the domestic stock market.”
Nguyen Huu Trung, trading manager at KBSV Securities, believes that foreign investors, particularly institutional clients with substantial assets, require specialised and expanded services compared to domestic ones.
“To connect institutional investors with corporate clients across the country, securities firms also need to place significant capital and adopt long-term strategies that may not yield immediate results. It is understandable why only a few securities companies have implemented such strategies. However, once stability is achieved and clients are attracted, the brokerage services for overseas clients hold immense potential,” Trung said.
From the perspective of Nguyen Anh Duc, director of Institutional Securities Services and Institutional Client Development at SSI Securities, the operating environment for brokerage services catering to foreign institutional clients has faced considerable challenges in recent years.
Previously, this segment was dominated by a few large securities firms that were early adopters. However, new competitors have emerged, including those with roots from Taiwan, South Korea, or Malaysia, leveraging their existing relationships with funds from their home countries.
“Some companies are also utilising sales teams from those regions to effectively engage with organisations with whom they have strong relationships in other foreign markets. Additionally, Vietnamese securities companies are employing low transaction fees as a strategy to compensate for their weaknesses,” Duc stated.
Hoang Anh, CEO of Guotai Junan Securities, highlighted that securities firms infused with foreign capital play a pivotal role as conduits for foreign investment into the Vietnamese market, affording them an advantage in providing brokerage services for foreign institutional clients.
“Their extensive international experience also enables them to excel in serving foreign backers. In fact, most foreign securities companies boast longstanding operations in one or more developed markets compared to Vietnam, granting them a competitive edge,” Anh noted.
Another advantageous aspect lies in their ability to mobilise capital at lower costs in developed countries for investment and expansion operations in Vietnam. These resources are being transformed into appealing and cost-effective products and services, enticing investors and augmenting market share.
Despite heightened competition, the top three brokerage firms in the market for foreign institutional clients have maintained stable market shares in recent years – Viet Capital Securities, SSI Securities, and Ho Chi Minh City Securities (HSC), according to statistics from Ho Chi Minh Stock Exchange. Aspiring companies aiming to enter the foreign client segment can learn from the experiences of these three brokerage firms.
Viet Capital Securities, holding a 25 per cent market share in 2022, possesses a robust team consisting of sales professionals offering value-added services, proficient traders, and a corporate access team. The company regularly organises online meetings and direct interactions with clients, providing valuable insights to investors worldwide.
Meanwhile, SSI has established an expansive clientele network, including prominent investment organisations from Asia, Europe, and the United States.
Duc of SSI revealed that in order to cultivate this position, SSI had to develop and continuously enhance all facets of its products and services for institutional clients. “The brokerage services for overseas institutional clients will continue to hold a crucial role for SSI. This segment represents a long-term business endeavour that will remain pivotal as the Vietnamese market progresses towards becoming an emerging market,” Duc said.
