ACB Securities (ACBS) has got the nod from the State Securities Commission (SSC) and Ministry of Finance (MOF) on its plan to increase charter capital by VND1 trillion to VND4 trillion. The capital contribution is from the holding bank ACB.

ACBS is a middle-sized securities company and it has reported impressive business results in the first nine months of the year.

However, stock trading is just part of securities companies’ operations.

Meanwhile, the stock market has been fluctuating recently.

In the long term, the Vietnamese stock market is predicted to see explosive growth as the national economy has been integrating more deeply in the world’s economy and the financial market has been expanding.

In the immediate time, by this year end, the high-capacity transaction system using South Korean technology will be put into operation. The competition in the stock market is getting fierce.

The capital increase will allow ACBS to increase its financial capability, approach more capital sources from banks, and enhance margin trading by increasing the maximum outstanding loans per client (3 percent of stockholder equity) and increase the maximum loans per share (10 percent of stockholder equity).

Prior to that, in late October, SSI announced a plan on collecting opinions from shareholders in written documents about an offer to sell 151 million shares to existing shareholders and issue 302 million bonus shares from stockholder equity. The plan is expected to be implemented in 2023.

SSI (Saigon Securities Incorporated) wants to issue 453 million shares in total and raise its capital to VND19.6 trillion, continuing to be the largest securities firm.

If successful, SSI will get VND5.3 trillion which will be used as additional capital for margin trading loans and investment in bonds, certificates of deposit and other valuable papers at a rate to be determined by the board of directors.

Most recently, VNDirect board of directors approved the plan to issue 304 million shares, including 244 million shares to be issued to the public, to increase its capital to VND18 trillion from VND12.178 trillion currently. 

The securities company’s charter capital has been increasing rapidly in the last few years and if the 2023 capital increase plan succeeds, its charter capital will increase by eight times compared to 2020.

Techcombank Securities is also moving ahead with the plan to raise its capital to VND10 trillion, while MBSecurities has decided to issue 57 million shares to raise capital to VND4.377 trillion.

Analysts say that over the last two years, securities companies have been focusing on raising charter capital, and the total capital has increased by 2.5 times. The trend is expected to continue because of big opportunities in long term.

In fact, the total capital of more than VND100 trillion of 25 securities companies is still a small figure compared with the share market worth $200 billion and a large corporate bond market.

Analysts believe that securities companies are rushing to increase capital these days to compete for market share and grasp opportunities to come when the market sees a boom. 

The stock market status is expected to be upgraded into emerging as the Government is trying to implement solutions to fix existing problems. Vietnam's stock market will be an attractive investment and business location for domestic and foreign businesses and investors.

The profits made by securities companies recovered strongly in the first nine months of 2023 from a low in 2022, mostly thanks to their investment activities (up 153 percent compared with the same period last year), following a recovery in valuation in the stock market.

Nevertheless, according to VIS Rating, investment in assets with high risks by securities companies is still high, accounting for 24 percent of total tangible assets.

By the end of September, investments in corporate bonds by some securities companies, including Techcombank Securities and VPBank Securities, accounted for 40-50 percent of total assets instead of 28-45 percent by the end of December 2022.

VIS Rating believes that securities companies’ profits will improve thanks to strong transactions amid the expected economic recovery in 2024.

Manh Ha