SSI leaves the billion-dollar market-cap club

June 16, 2022 - 17:58
VNDirect Securities Corporation (HoSE: VND) is now the only securities firm in the billion-dollar market capitalisation club.
Investors at SSI Securities Corporation's office. — Photo courtesy of SSI

HÀ NỘI — As the stock market faced another bearish session on Wednesday, with the VN-index dropping below the 1,200-point level at some points, securities stocks reported a strong sell-off.

Many ticker symbols like SSI Securities Corporation (HoSE: SSI), VND, Hồ Chí Minh City Securities Corporation (HMC) and Vietinbank Securities (HoSE: CTS) hit floor prices.

Particularly, after Wednesday's trade, which marked the fifth straight losing session of SSI, the company's share prices plummeted to the lowest level in more than a year at VNĐ22,650 per share (US$0.98 a share).

At this price, SSI's market capitalisation was approximately VNĐ22.5 trillion, down nearly 60 per cent from its peak and officially leaving the billion-dollar market capitalisation club on the stock market.

SSI's story is considered a typical case in the securities sector. During the market boom from the end of last year to earlier in 2022, numerous securities firms set records. 

At that time, three ticker symbols in the field stepping into the billion-dollar market capitalisation club were VND, SSI and Việt Capital Securities JSC (HoSE: VCI), with many other securities stocks posting market capitalisation of more than VNĐ10 trillion.

There were even times when the market caps of VND and SSI breached $2 billion. Now VND is the only name left in the club and is at risk of being "kicked out". 

It is even likely there will be no stocks left with market capitalisation of more than $1 billion due to unpredictable movements of the stock market.

The decline in liquidity is one of the main reasons behind the downside risk of securities stocks. Expected rising interest rates after remaining low for a while have a significant effect on cash flows, while scandals in the bond market also weighed on the stock market's liquidity.

Statistics showed that the average liquidity on the southern bourse - the Hồ Chí Minh Stock Exchange (HoSE) - has decreased since last November when it peaked. 

In May, the average trading value was only VNĐ13.8 trillion per session, the lowest since February 2021.

The low liquidity hurts not only the securities firms' business results, but also huge supplies from previous issuances for capital raising efforts. 

In the short term, analysts from Vnstockmarket said that the market will move sideways in a range of 1,200-1,400 points. But in the long term, it is beginning to show great divergence among companies in sectors in investment service quality, policies, and the Government's orientation or competitiveness. 

ACB Securities (ACBS) said that securities brokerage services are very competitive as there are 74 securities, while their products are not much different from each other. Moreover, proprietary trading is expected to struggle in the second quarter of this year, as the market is not in a favourable condition. 

Securities brokerage services and proprietary trading are two of the main business activities contributing to securities firms' results.

Meanwhile, there is still room for growth in the Vietnamese stock market thanks to low individual stock accounts, the securities company added. As of May 31, the securities accounts of domestic investors totalled 5.6 million, accounting for 5.7 per cent of the population. — VNS