This is the fifth installment of a series of interviews on chiefs who run overseas units of Korean asset management, banking and securities companies, examining their key strategies for global expansion. -- Ed.
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Kang Moon-kyung, CEO of Mirae Asset Securities(Vietnam) JSC (Mirae Asset Securities) |
Taking a step beyond simply adapting to the local market, Seoul-based securities firm Mirae Asset Securities’ Vietnamese arm looks to fully establish itself in the Southeast Asian country.
Since 2007, South Korea's largest securities firm Mirae Asset Securities has been working to tap into the financial market of Vietnam, seeing potential in its fast growing economy.
“The Vietnamese branch aims to become more than just an affiliate of a Korean company, but a leading securities firm that represents Vietnam,” Kang Moon-kyung, CEO of Mirae Asset Securities (Vietnam) JSC, said in an email interview with The Korea Herald.
“We are already competing with top ranking local securities firms here,” Kang said.
As Kang said, Mirae Asset accounted for 5.47 percent of stock brokerage transactions of the Ho Chi Minh Stock Exchange last year, the fifth-largest share. It was the top ranking firm among foreign securities firms in Vietnam.
“We are pushing for full localization. Unlike other foreign-affiliated securities firms, we have launched branches outside of Ho Chi Minh and Hanoi,” Kang said.
While most foreign securities firms only open branches in Ho Chi Minh and Hanoi, the two major cities of Vietnam, Mirae Asset Securities Vietnam expanded out to smaller cities such as Hai Phong, Da Nang, Can Thao and Vung Tau.
“It is true that cities outside of Ho Chi Minh and Hanoi have small economies and a low population interested in stock investments,” Kang said, admitting that the branches do not yield high profits.
“But we are sending a message to the Vietnamese customers that ‘Mirae Asset is a local corporation that stands with the customers,’” he said.
Branching out across Vietnam is a strategy to fight the prejudice that foreign-invested finance firms are not loyal to the local market, Kang explained.
“Local customers raise their guard when dealing with foreign firms out of concern that they might take off when the market collapses,” he said. “Reaching out across Vietnam shows Mirae Asset’s will to appeal as a local firm, regardless of the short term results.”
Major Korean securities firms, including Korea Investment & Securities, Shinhan Securities and KB Securities, have branched out their business in the country, seeing it as a crucial market.
Like its economy, Vietnam’s stock market has been rapidly growing. The country's daily transaction volume surpassed 2 trillion won ($1.53 billion) in 2021, compared to 1 trillion won in 2020. Prior to the pandemic, the figure was between 400 to 500 billion won.
To expand the range of business in preparation for when the stock market hits its next growth spurt, Mirae Asset’s Vietnamese branch has been working on raising its equity capital, which is directly related to the firm’s business range and scale.
“As Vietnam’s economy grows and capital market expands, securities firms’ capital capability has become more crucial. Local firms are competitively sizing up as customers’ need for capital is increasing," he said.
The firm’s chartered capital increased from 300 billion Vietnamese dong ($12.8 million) in 2016 to 6.6 trillion dong in 2022. Its equity capital hit 9.2 trillion dong.
Despite the growth, limits still exist. Vietnam's financial sector is heavily dependent on commercial banks, not leaving much room for investment banks.
“As a developing country, it is still in the phase of accumulating assets. Commercial banks play a bigger role than investment banks for the time being,” Kang said.
Kang, however, believes Mirae Asset could expand its role in the country, making a bigger financial presence in the near future.
“We hope to strengthen our IB portfolio as a securities firm, doing more than brokerage transactions. We have newly launched a new project financing team to develop new alternative investment assets, in addition to the existing acquisition financing for mergers and acquisition deals,” he said.
