Securities companies are racing to raise capital.

Many securities companies are proposing to raise capital ranging from several hundred billion to trillions of dong to expand investment and margin lending.

At the shareholders' meeting in early April, Vietcap Securities Company (VCI) will present a plan to issue more than 280 million additional shares, bringing its charter capital to over 7,000 billion VND.

Vietcap raised capital through the issuance of shares under its employee stock option program (ESOP), bonus shares for shareholders, and a private placement. The estimated amount raised is approximately VND 2,400 billion (excluding bonus shares), of which 88% (approximately VND 2,100 billion) will be used to finance margin lending.

Similarly, many other securities companies have also been preparing capital increase plans since the beginning of this year. Guotai Junan Securities (Vietnam) announced that it will soon sell over 69 million shares to existing shareholders to double its capital. The selling price has not yet been decided, but based on par value, the amount raised is nearly 700 billion VND. The main purpose of the capital increase is for margin lending, accounting for 75% of the proceeds. 10-15% will be allocated to derivatives trading and investment banking activities.

Nhat Viet Securities (VFS) also plans to issue an additional 120 million shares to existing shareholders, increasing its capital to VND 2,400 billion this year. 50% of the proceeds will be used for proprietary trading, and the remainder will be used to expand margin lending.

In addition, FPTS, ACBS, and SSI – leading companies in terms of charter capital with over 15,000 billion VND – are also preparing to increase their capital by several hundred to thousands of billions of VND.

An investor's online trading screen on the Yuanta Securities exchange. Photo: Quynh Tran

Unlike previous capital increases, analysts believe that this expansion plan by securities companies is also a preparation for welcoming the new KRX trading system, with the expectation of a significant increase in market liquidity.

"Amid a slowing real economy , low bank deposit interest rates, and a frozen real estate market, capital is flowing into the stock market," VNDirect's strategy report earlier this year stated.

KRX - the new information technology system that HoSE has been testing since March 4th, after several delays. This system is expected by many investors, securities companies, and analytical units to become a "positive force" for the market in the long term, helping to fulfill the missing conditions for upgrading securities.

According to KB Securities Vietnam (KBSV), the new system has helped increase the average daily trading value of the VN-Index by 30-70% compared to the average liquidity of the last 5 years.

As in the case of VietCap Securities, according to SSI Research , with a strategy focused on expanding brokerage services for individual clients and preparing resources to implement a payment support model for institutional investors (NPS), the pressure to raise capital this year is very high, especially since VCI has not carried out any capital increase since 2017.

"Many securities companies still have sufficient margin lending capacity, but it's difficult to predict how much liquidity and investor demand will increase once the new system is launched," said the head of consulting at a securities company in Hanoi .

Charter capital serves as the basis for securities companies to provide margin loans to customers. According to regulations, securities companies are not allowed to lend margin exceeding twice their equity capital at the same time. Therefore, increasing the margin lending "quota" beforehand is fundamental to the fierce competition for market share that has been raging recently.

Since the beginning of 2024, the flow of money into the stock market has continuously increased. Liquidity in many trading sessions has returned to the $1 billion mark, a figure equivalent to when the market peaked at 1,500 points.

Despite expanding their operations and proprietary trading activities, revenue from brokerage fees and margin lending remains the main source of income for many securities companies. For example, revenue from brokerage and margin lending activities brought Vietcap over 1,200 billion VND last year, accounting for 50% of its total revenue.

However, unlike the stability of the previous decade, the top 10 brokerage market share rankings have seen significant changes in recent years. Companies that had held the top position for a long time can also lose their position after a short period.

Minh Son

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