Korea's Top 5 Brokerages All Present in Vietnam
South Korean securities companies are expanding their presence in Vietnam, an emerging market with high growth potential. Vietnam is the only Southeast Asian country where the Big Five of South Korea’s 10 major securities firms run business.
Most recently, KB Securities Co. has increased the number of its branch offices in Vietnam to four by opening one in Ho Chi Minh City.
KB Securities Vietnam (KBSV), a subsidiary of KB Securities in Vietnam, recently opened a Saigon branch office. With the expansion of the branch network, the bank is planning to break into the investment banking (IB) market.
Mirae Asset Daewoo Co., which is the first among large Korean securities companies to enter the Vietnamese market, has been aggessive in expanding its business in Vietnam. The firm has raised the capital of its local subsidiary to 217.70 billion won (US$194.08 million) through two rounds of capital increase, the third largest among 70 securities companies in Vietnam. The affiliate acquired a license for derivative products at the end of last year.
Korea Investment & Securities Co. obtained a license for derivative products on the Hanoi Stock Exchange in July last year for the first time among foreign securities companies and the eighth time among all securities firms in Vietnam.
Shinhan Investment Corp., which entered Vietnam later than its competitors, successfully managed a Vietnamese company’s detachable bond with warrant issuance in November last year for the first time among Korean brokerages in Vietnam. The issuer was An Phat Plastic, the largest plastic packaging producer in Southeast Asia, and the scale of issuance amounted to 400 billion dong (US$17 million or 19 billion won).
NH Investment & Securities Co. is also planning to enter the derivative market after turning its joint venture in Vietnam into a wholly owned subsidiary in April this year.
Samsung Securities Co. is seeking to trade stocks and exchange research through a partnership with a large local securities firm, Ho Chi Minh City Securities Corp., rather than launching a local subsidiary.
South Korean securities companies are regarding Vietnam as a key market in Asia due to its high growth potential. Last year, Vietnam’s economy grew 7.08 percent, surpassing the government’s initial goal of 6.7 percent. This is the highest figure over the last 10 years. Vietnam has consolidated its position as a post-China market as China’s economic growth has slowed down. Its economy has expanded by some 6 percent per year since 2014.
The Vietnamese stock market surged nearly 50 percent in 2017 compared to a year earlier but it is going through ups and downs amid concerns about stock markets in emerging countries as a whole and the trade dispute between the United States and China last year. The Vietnam's benchmark VN-Index hit a record high of 1,204.33 in April last year but plunged to 878.22 on Jan. 3 this year. The figure showed a whopping 30 percent drop from the previous highest point.
However, there is still faith in rising Vietnamese stock market. Its high price-to-earnings ratio (PER), which made investors hesitate to make an investment in Vietnamese stocks, is also becoming stable. The PER, which soared to 20 times early last year, decreased to 15 times on average. It is now approaching 15.7, the average PER in the past three years.
Many market experts say the Vietnamese stock market is still undervalued. Kim Ye-kyung, senior researcher of the financial rating division at NICE Investors Service, said, “Unlike in neighboring countries where market cap exceeds 100 percent of gross domestic product (GDP), the market cap of the Ho Chi Minh Stock Exchange accounted for only 59.6 percent of GDP as of the end of November last year.”