Brokerages seek new market share in nation’s hinterlands

Sunday, May 4, 2008
Several securities firms have continued to expand their brokerage offices into provincial rural and urban areas to attract new investor activity despite the stock market downturn.
These securities groups are going on the offensive to grab their share of the growing nationwide demand for access to traded stocks in anticipation of a coming market recovery.
The boom in the number of new brokerage offices has been facilitated at the same time by new, easier administrative procedures for securities companies to establish localised branches.

Securities firms can now open local offices without first having to obtain permission from the State Securities Commission (SSC), and are simply required to report a new branch once it has already opened.

Brokerage houses have cut costs by co-ordinating with local enterprises. While the securities company focuses on personnel and equipment, the local enterprise provides the real estate in which the partnership is housed.

Expansion into the provinces has also been motivated by the mushrooming number of agencies in the trading hubs of Ha Noi, HCM City and Hai Phong City. As these markets approach the point of saturation, firms have begun to look outward in the search for greater transactional capacity.

For example, An Binh Securities Company (ABS) co-operated with Tat Thanh Co Ltd to set up an agency in Thai Nguyen City on April 24. This was the 16th local branch of ABS to open nationwide.

"The opening of this new ABS branch will satisfy the demand of this industrial city’s stock market investors," said an ABS representative.

On the same day, Capital Securities Co (CSC) opened an agency in northern Ha Nam Province. This is the first provincial branch of CSC, and also the first securities firm to open a local office in Ha Nam.

APEC Securities Co (APECS) opened an office in the northern Thai Nguyen Province on April 23 in co-ordination with Tan Cuong Hoang Binh Joint stock Co.

APECS recently opened branches in the four provinces of Long An, Dak Lak, Nam Dinh and Nha Trang City, as well as an office in Ha Noi.

On April 12, VNDirect Securities Co launched a local trading office at Vinh Yen Township in northern Vinh Phuc Province.

Nguyen Manh Hao, director general of APECS, said that since the firm’s inception it had pursued the development of a nationwide network of offices.

Hao expressed reservations about the promise of remote market connectivity, however, saying, "Although the application of modern technologies has made it possible to trade securities via telephone or online, someone still has to be there on the trading floors to make a deposit or withdrawal on an account, or register an account in the first place, so the on-site agency will always be necessary."

To operate such an agency, said Hao, it costs APECS, and other firms like it, tens of millions dong a month. This sum is not small, especially given the current difficult situation with the market as well as the fierce competition between securities firms.

Taking on the added cost of developing a nationwide brokerage network, therefore, is a long-term strategy on the part of APECS with a view towards staking out a dominant position in the market in advance of its rebound in the future, Hao added.

Viet Nam’s stock market is still in its infancy and it has great potential to develop under long-term vision. While the number of private individuals investing in securities throughout the country so far remains modest, analysts predict that the figure will continue rising steadily.

Hoang Van Hiep, a farmer in the central highland province of Lam Dong said: "While real estate prices are high and unstable, investment in securities becomes more attractive."

Another farmer in Lam Dong Province said: "Securities investment is a new and unfamiliar channel of financial activity for me, but definitely one that I intend to look into further and in which I hope to one day participate." (VNS)