While bank loans for the Vietnamese stock market are being narrowed, the capital base increase of a series of securities companies becomes a big concern of many investors as market performances in 2014 fell short of expectations.
High prospect in 2015
In its documents submitted to the Annual General Meeting of Shareholders 2015, Vietnam Investment Securities Co (IVS) said although the stock market is still facing difficulty on narrowed capital flows from banks as a result of new regulations of Circular 36, the internal force of the stock market is still enough to make a big bounce this year thanks to the low rate of margin loans. IVS shareholders also approved of the decision to hike its registered capital from VND161 billion to VND350 billion. Investors now prefer the stock market to gold, forex and real estate markets.
However, according to IVS, investors will not easily take a huge profit from the equity market although the potential for growth is bright in 2015. Hence, governmental policies will play an important role in drawing cash flows for the market and improving the market liquidity.
In its business performance plan and capital increase plan in 2015, IB Securities Company (VIX) said that the Vietnamese economy will maintain steady growth in 2015 and the stock market will benefit from the equitisation of State-owned enterprises (SOE) and the divestment from noncore businesses from SOEs. This will be a magnet to both domestic and international investors. The company predicted that the VN-Index, the main gauge of Vietnam, will move in the range of 580- 680 points in 2015. Its performance will be stable as in 2014 and perhaps expand 10-15 per cent in the year.
Huge capital expansion
Many securities companies have scaled up their capital base in the past time. After IVS disclosed a treble increase, VIX also announced to issue 30 million shares to raise its registered capital from VND300 billion to VND609 billion. The shares will be offered to existing shareholders at a 1-to-1 ratio and a price of VND10,000 per share and sold to employees via ESOP Plan. The company hoped to take proceeds of VND309 billion to add to working capital.
The most “shocking” plan to investors has possibly come from KIS Vietnam Securities Corporation, which plans to raise its chartered capital from the current VND263.6 billion to VND1,113 billion through a private share placement. When the share issue is completed, South Korean shareholders will hold 97-98 per cent of the company’s stake. Tran Van Ai, President of KIS Vietnam Securities Corporation, said this move aimed to meet the new requirement that a securities company must have at least VND900 billion of capital to engage in derivative securities brokerage. After the capital increase, KIS Vietnam will advance into the list of 10 largest securities companies in Vietnam by registered capital.
Smaller brokerages also announced their capital expansion plans. Royal Securities Corporation (ROSE) disclosed its plan to hike its registered capital from VND35 billion to VND135 billion by offering 10 million shares to its existing shareholders at VND10,000 a share. The proceeds will be used for financial restructuring and working capital augmentation. The company also planned to replace some key personnel in a bid to improve their business performances.
As many securities companies have not called their annual shareholder meetings this year. Investors will thus hear more capital-adding plans from brokerage houses in the coming time. This is also a move to enrich the capital flow for the equity market when banks tighten loans for securities investment.
Si Son
Vietnamese
