Korean securities firms rush to Vietnam
Vietnam has become the most favorable destination for the nation’s securities firms.
Five out of the top 10 domestic brokerages entered the Southeast Asian country to diversify their business portfolios as part of their efforts to overcome Korea’s saturated financial market.
They are not only establishing footholds in the country but also widening their business areas. Korea Investment & Securities introduced derivative products for the first time as a foreign brokerage in Vietnam.
Of Korea’s brokerages, Mirae Asset Daewoo is the first securities firm to have established a corporate body in Vietnam. And the securities firm has since raised capital by issuing new stocks twice.
The capitalization of Mirae Asset Daewoo’s corporate body in Vietnam is now 217.7 billion won ($194.4 million), the third-largest brokerage among the country’s 70 firms. It acquired a license recently from Vietnam’s financial authorities to sell derivative products.
“Mirae Asset is strengthening its overseas operations in a bid to diversify its revenue sources. It was also the reason why Chairman Park Hyeon-joo appointed himself as the firm’s Hong Kong operation head,” a Mirae Asset Daewoo official said.
“Reflecting the country’s rapid economic growth, Mirae Asset has raised capital by issuing new stocks twice since 2017. It is now absolutely the largest Korean securities firm that made an entry into the country in terms of capitalization.”
KB Securities recently opened two more branches in Ho Chi Minh City, strengthening its presence in the country. It said it aims to make inroads into the country’s investment banking and derivatives markets soon.
“The global economy shows it has entered a downturn, but I believe Vietnam will continue its rapid growth regardless of such external factors,” KB Securities CEO Kim Seong-hyun.
NH Investment & Securities also acquired a 49 percent stake in local brokerage CBV in 2009, and took over the remaining shares in 2016 to establish its local arm NH Securities Vietnam in February.
Shinhan Investment, which entered Vietnam in 2016, was named as an underwriter for local engineering equipment maker GELEX to issue the firm’s corporate bonds in May. It was the first time for a Korea brokerage to be chosen as an underwriter for a local firm’s bond issuance in Vietnam.
Despite the global slowdown and following foreign exchange crisis in some emerging economies, Vietnam continued its rapid growth rate of 7.08 percent last year. It was the country’s highest growth figure in the last 10 years.
Vietnam is now considered to be an alternative market replacing China as the latter has displayed clear signs of slowdown in the past several years. Vietnam’s economic growth rate has remained over 6 percent every year since 2014.
Vietnam’s stock market is facing a temporary slump due to prevailing fears about stocks in emerging markets accompanied with the ongoing trade dispute between the U.S. and China.
Vietnam Ho Chi Minh Stock Index peaked at 1,204.33 points in April, and plunged over the year. It stood at 878.22 points as of Jan. 3, a nearly 30 percent drop over nine months.