Vietnam securities brokerage sector – 2021 review and 2022 outlook

9M/2021 review:

The VNINDEX has increased 31.1% YTD, becoming one of the best performers in the region, driven by the strong influx of retail investors and strong economic outlook. Despite the strict lockdown measures in Q3, the number of new trading accounts grew remarkably by over 336,000 accounts thanks to the eKYC technology introduced by many brokers. As a result, the 9M/2021 earnings results of brokers were superior, resulting in a net profit growth of 97.5% y/y driven by:

  • A 108.3% increase in revenue, due to strong growth in all income streams. Brokerage and margin lending income were the top performers as 9M/2021 trading value was fourfold y/y, with the margin lending balance of many brokers also being tripled or even quadrupled.
  • A moderate increase in SG&A expenses (+25.0% y/y) thanks to better digitalization from brokers and less fixed costs due to the work from home trend.

Q4/2021 & 2022 outlook:

Going forward, the outlook for brokerage sector remains good because:

  • Trading volume is high and the number of new trading accounts is still rising fast. Investing in the stock market has becoming more popular. The average trading volume QTD (VND 24,314bn) is 20% higher than the YTD average trading volume (VND 20,240bn).
  • New money is coming into the market as both foreign and local brokers are raising capital via bond and equity issuance.
  • More positive signs can be seen. For example, the $34bn support package that the MOF submitted to the government. Also, the Korean trading system (KRX) will be available in Q1/2022, according to the CEO of HOSE.
  • The return of foreign investors thanks to strong performance of the market and the potential to be upgraded to a FTSE emerging market with the new trading system.

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