Race in the capital securities market remains unabated

Capital Surge in Vietnam's Securities Sector

Vietnam's securities sector is witnessing a significant surge in capital-raising efforts, with several firms looking to boost their charter capital to enhance their operations and meet increased investor demand.

In a move aimed at raising around VND3.6 trillion, Xuan Thien Securities JSC (XTSC) has set an ambitious goal of increasing its charter capital from VND2 trillion to VND20 trillion by 2026. Similarly, Ho Chi Minh City Securities Corporation plans to issue nearly 360 million shares to shareholders at a ratio of 2:1 with an expected price of VND10,000 per share.

The primary objective of these capital increases is to enhance margin lending limits due to increased investor demand for margin loans. SSI Securities Corporation, for instance, intends to issue over 415.5 million shares at a ratio of 5:1, with an offering price of VND15,000 per share and a potential fundraising target of more than VND6.2 trillion (US$236 million).

Techcom Securities (TCBS) is planning its largest IPO to date, with an expected offering of 231.15 million shares, potentially raising over VND10.8 trillion. Tien Phong Securities Corporation is looking to double its charter capital through a private placement worth up to VND3.5 trillion.

VPBank Securities (VPBankS) is planning an IPO to bolster its capital base and expand operations within the parent banking ecosystem. Securities firms with larger capital bases may improve their credit ratings, facilitating easier access to debt financing.

The inflow of capital into securities firms may result in lower margin lending rates as companies compete for customers. However, the rapid capital increases could lead to stock dilution, putting downward pressure on share prices.

In a market where scale of capital is key, the trend of raising capital is unlikely to slow in the short term, with major players aggressively expanding their financial capabilities. SSI is currently conducting a private placement of more than 104 million shares, representing 5.28 per cent of the total shares outstanding.

The capital-raising trend in Vietnam's securities sector continues, driven by high market valuations. Securities stocks have exhibited remarkable price increases, leading to heightened valuations across the sector. However, existing shareholders should monitor issuance schedules to mitigate excessive dilution and make informed decisions, as the Ministry of Finance recently proposed immediate taxation of dividends or bonuses in stock.

In conclusion, the securities sector in Vietnam is witnessing a surge in capital-raising efforts, with firms looking to expand their operations and meet increased investor demand. While this trend may lead to lower margin lending rates and increased competition, it also poses risks of stock dilution and potential downward pressure on share prices. Shareholders are advised to stay informed and make strategic decisions based on the issuance schedules and market conditions.