The VN-Index, Vietnam's benchmark stock market index, has risen 164 points (12%) since the beginning of July, reaching 1,531 points. During the same period, several stocks in the securities sector, such as VIX, CTS, VND, and SSI, have increased by tens of percentage points, acting as a catalyst for the overall market to surpass 1,500 points for the second time in history.

Nguyen Anh Duc, managing director of institutional brokerage and investment advisory at SBB Securities (SBBS), believes the anticipated upgrade has driven up scores and positively impacted companies in the sector. "Securities companies will directly benefit from the influx of foreign capital, a more active market, and increased liquidity," Duc said.

Vietnam's stock market is currently classified as "frontier" by FTSE Russell, a global index provider and ranking organization, and is being monitored for an upgrade. Vietcap Securities estimates that inclusion in the emerging market list could attract an additional 6 to 8 billion USD in foreign investment.

Many experts believe Vietnam could be upgraded to "emerging" status in October of this year. Meanwhile, Hoang Van Thu, vice chairman of the State Securities Commission, at the Ministry of Finance's regular press conference on 2/7, predicted the market would be upgraded in September. On 17/7, Finance Minister Nguyen Van Thang also stated that Vietnam would soon meet the upgrade criteria during a meeting with FTSE Russell.

Thanks to the upgrade expectation, market liquidity has also improved, leading to more positive business results for securities companies, according to Nguyen The Minh, director of retail client analysis at Yuanta Securities Vietnam.

Statistics show that the average daily trading value in July on the Ho Chi Minh City Stock Exchange (HoSE), which accounts for nearly 80% of the stock market capitalization, reached over 31 trillion VND. Since April of this year, liquidity has consistently remained above 20 trillion VND, a level not achieved in many previous months.

Nguyen Anh Duc assesses this liquidity level of over 30 trillion VND as positive for securities companies' revenue, especially in brokerage services.

The positive business results of securities companies are a notable factor. "Many securities companies have profited significantly from proprietary trading in Quarter II as the market recovered from the April downturn. As a result, the sector's profits have improved considerably," the Yuanta expert commented.

Profits in the securities sector reached a new record in Quarter II, exceeding 10 trillion VND for the first time, according to data compiled by VnExpress. Several companies such as TCBS, SSI, MBS, and VND recorded increased profits. Among them, companies like VIX, CTS, and SHS saw significant gains from proprietary trading.

However, experts caution that this group may experience a short-term decline. "As the market corrects after a continuous rally, the securities group will also be affected as investors take profits," The Minh noted.

The unprecedentedly large margin lending scale is also a potential risk for the securities group, according to an expert from Yuanta Securities. At the end of Quarter II, the outstanding loans of companies in this sector reached 303 trillion VND, the highest ever. Of this, margin lending accounts for over 95%.

According to Nguyen Anh Duc, the valuation of some securities stocks is no longer cheap compared to the general market. The price-to-book (P/B) ratio of some stocks like VIX, SSI, MBS, CTS, and FTS has exceeded two times. Meanwhile, a stock is considered attractively valued when this ratio is less than one.

"However, if the market continues to be buoyant, it's entirely possible for the P/B ratio of securities stocks to reach 2.3 to 2.5 times," Anh Duc said. Nguyen The Minh added that if the sector's profits continue to increase, valuations will decrease.

Despite this, experts remain optimistic about the long-term prospects of the securities group. SBBS expert Nguyen Anh Duc shared that the market still has room to grow, so companies in the sector will benefit accordingly. "The VN-Index could surpass its peak in the coming period, so investors will continue to pour money into buying stocks. This will further improve the business performance of securities companies," Duc shared.

Pyn Elite Fund, a foreign fund with a scale of 800 million USD, predicts that the VN-Index could reach 1,800 points by the end of this year. Vietcombank Securities (VCBS) estimates the index could reach 1,660 points this year.

The market upgrade continues to be the reason cited by both experts when discussing the potential of this group. Nguyen The Minh shared that by improving its position, Vietnam's stock market will attract new foreign capital, thereby increasing its scale. In addition, after the upgrade, many businesses will want to list their shares, benefiting the issuance advisory services of these companies.

"I believe that in the latter half of the year, proprietary trading will no longer have a major influence on the business results of the securities group. Instead, revenue from margin lending, issuance advisory, and brokerage services will grow," the Yuanta expert said.

Stock trading at the Yuanta floor in District 1, 3/2021. Photo: Quynh Tran

Stock trading at the Yuanta floor in District 1, 3/2021. Photo: Quynh Tran

SSI of SSI Securities, HSC of HCM City Securities, and VCI of Vietcap Securities are three representative stocks in the sector that both experts believe still have growth potential. These are reputable units in the industry with strong brands.

All three companies are among the top 5 with the largest brokerage market share. Therefore, they have a large customer base, ranging from institutions to businesses. In addition, these units are also well-known for their issuance advisory services.

Trong Hieu