VNDirect Securities Corporation's headquarters in Đà Nẵng. Photo courtesy of the company

The Vietnamese stock market is experiencing one of its worst times in recent years as the VN-Index plummeted below 1,000 points, the lowest in nearly two years.

A number of stocks plunged and even broke through the long-term bottom, but bottom-fishing cash flow remained on the sidelines, making the market more gloomy.

Amid the bear market, securities stocks were heavily affected as they faced strong sell-offs due to rising concerns about business results, which were influenced by the market's volatility. 

Ticker symbols such as SSI Securities Corporation (HoSE: SSI), VNDirect Securities Corporation (VND), Viet Capital Securities JSC (VCI), Ho Chi Minh City Securities Corporation (HCM), MB Securities JSC (MBS), and Saigon-Hanoi Securities JSC (SHS), all fell deeply, with their market prices reducing about 60-75 per cent from the peaks. As the result, the market capitalisation lost trillions, even tens of trillions of đồng.

Many securities firms set unprecedented records during the boom of the market from the end of last year to earlier this year. At that time, the securities group contributed to three representatives in the billion-dollar market capitalisation club, with SSI's value even exceeding the threshold of US$2 billion. But now, the figures are less than half and no securities names are found on the list.

For securities companies, market liquidity is always an essential factor that greatly impacts the results of their key business segments such as brokerage, proprietary trading and lending. A bull market will promote revenue from brokerage fees and investors' need for leverage, and vice versa.

Liquidity is also a key element determining market fluctuations and indirectly affecting the proprietary trading activities of securities firms. 

After the booming period of the market, the wave of new investors has cooled down significantly. The number of new accounts opened by domestic investors has continuously dipped, from over 450,000 accounts in May and June to only about 100,000 accounts in September, the lowest level in 14 months since July 2021.

The liquidity has also gone down dramatically, and there are no longer sessions with matching value of a billion dollars. Instead, investors' sentiment was gloomy, and there were even trading sessions where the matching value on the Hồ Chí Minh Stock Exchange (HoSE) was less than VNĐ7 trillion ($281.6 million). 

Since the beginning of October, the average matching value on the southern bourse has reached just over VNĐ9.4 trillion per session, a decrease of nearly 21 per cent month-on-month. This was also the lowest level since the beginning of 2021.

The market's liquidity also plays an important role in deciding the ability to rebalance the stock supply, which has surged after the massive increases in the capital of securities companies recently. Statistics showed that the number of outstanding shares of the securities group rose by 2.6 billion units compared to the beginning of the year, of which 2.2 billion are free floats.

This is a huge number, requiring ample cash flow to absorb. Therefore, securities stocks have been diligently searching for the bottom recently even though the market price has been deeply discounted from the top.

The liquidity has not showed signs of improvement even though margin lending has climbed again in the third quarter. 

Regarding the impact of bond tightening, KIS Securities believes that the income from bond issuance advisory activities of securities companies will be affected by the tightening of management policies after Decree 65 is implemented. The prospect of revenue growth coming from the redistribution of corporate bonds is forecast to be an uncertainty.