Việt Nam’s securities firms ramp up capital ahead of market upgrade

Việt Nam’s securities firms ramp up capital ahead of market upgrade

Việt Nam’s top securities firms are accelerating capital-raising efforts in anticipation of the country’s long-awaited upgrade to emerging market status, expected next month.

An electronic board shows stock prices at the Ho Chi Minh Stock Exchange. Top securities firms are boosting capital ahead of Việt Nam’s expected market upgrade next month. — VNA/VNS Photo

Việt Nam’s top securities firms are accelerating capital-raising efforts in anticipation of the country’s long-awaited upgrade to emerging market status, expected next month.

The move aims to boost lending capacity, scale up core operations, and attract increased foreign institutional investment.

Leading brokerages such as SSI Securities, Techcom Securities (TCBS), and VPBank Securities (VPBankS) are rolling out aggressive equity issuance plans, underscoring a growing belief that market conditions will favour expansion.

SSI, the country’s largest brokerage by capital, announced in early September its plan to issue 415.5 million shares to existing shareholders at VNĐ15,000 per share.

The issuance is expected to raise VNĐ6.2 trillion, raising the company’s charter capital from VNĐ20.8 trillion to nearly VNĐ25 trillion. Proceeds will support margin lending, bond investments and deposits.

Meanwhile, TCBS completed its initial public offering, raising VNĐ10.8 trillion by selling over 231 million shares at VNĐ46,800 each. Approximately 70 per cent of the funds will be used for proprietary trading, with the remainder earmarked for margin lending.

VPBankS is also preparing to offer 375 million shares, equivalent to 25 per cent of its current equity, at a minimum price of VNĐ12,130. The firm’s capital will increase from VNĐ15 trillion to VNĐ18.75 trillion following the offering.

Other firms, including VPS, HSC, MBS, KAFI, TPS, and TVS, have also disclosed plans to raise hundreds of millions of dollars through new share issuances in the coming months.

Market reclassification

The capital-raising spree is driven in part by optimism surrounding Việt Nam’s expected upgrade from frontier to secondary emerging market status by global index provider FTSE Russell.

The upgrade would mark a turning point for Việt Nam’s equity markets, opening the door to increased global fund inflows.

The country’s benchmark VN-Index has climbed nearly 33 per cent year-to-date, closing at 1,671 points on September 16, while average daily trading turnover has topped VNĐ39 trillion (US$1.5 billion), which is a record high.

Nguyễn Trọng Đình Tâm, deputy head of Research at ASEAN Securities, said: “Firms are preparing capital buffers to support margin lending and proprietary trading amid a bullish market and potential reclassification.”

Current regulations limit securities firms’ margin lending to two times their equity, prompting many to raise capital as they approach their lending ceilings.

Digital assets 

Beyond core lending and trading, brokers are preparing for a broader suite of investment products and services expected to be rolled out post-upgrade.

New offerings include prefunded trading services designed to meet settlement standards for foreign investors, as well as future participation in the digital asset market.

Việt Nam is planning a five-year pilot digital asset exchange programme, requiring participants to hold at least VNĐ10 trillion in capital, with 35 per cent held by financial or tech institutions.

Firms like SSI, TCBS, and VIX have already established or invested in digital asset subsidiaries. VPBankS has outlined digital assets as part of its 2030 roadmap.

Risk of overcapitalisation 

While optimism is running high, analysts caution that overcapitalisation could pressure profitability if investor demand slows.

“If market momentum fades, excess capital may drag down return on equity (ROE) and weigh on share prices,” said Nguyễn Anh Đức, executive director at SBBS.

Following the last wave of capital increases in 2021, several firms reported falling ROEs during the subsequent market downturn.

SSI’s ROE fell from 19 per cent in 2021 to 10 per cent by 2023; VNDirect saw a drop from 24 per cent to 12 per cent over the same period.

Dilution is also a concern. An increase in outstanding shares tends to reduce earnings per share (EPS), potentially making stocks less attractive in the short term.

Despite near-term risks, analysts see long-term potential.

The sector's average price-to-book (P/B) ratio currently sits at 2.2 times, well below its 2021 peak of 3 times, suggesting valuation upside.

“Việt Nam’s securities sector still has room to grow, especially with strong foreign interest once the upgrade is confirmed,” he said.

Speaking at a recent meeting with the London Stock Exchange, Finance Minister Nguyễn Văn Thắng reaffirmed the government’s commitment to meeting all criteria for reclassification by FTSE Russell in 2025.

As the country's financial markets mature, securities firms appear poised to lead the next phase of growth, assuming the momentum holds, experts note.

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