The upbeat outlook is underpinned by the resilient GDP growth figure of 7.7 per cent on-year for the second quarter of 2022 – the highest in 10 years – and corporate earnings growth projections – FY22 EPS growth of around 20-25 per cent on-year.

The recent tightening of liquidity will soon reverse when local political news subsides in the fourth quarter as the government finalises its regulatory framework for capital markets including the amended Decree 153 and Circular 39.

While global uncertainty persists, liquidity in the equity market has fallen close to levels last witnessed in 2018 and the VNindex is trading at an unprecedented -2 standard deviation of the five-year P/E average, signalling an inflexion point is near for Vietnam’s equity market.

Indeed, the brokerage business in Vietnam is experiencing a golden period of high growth with low penetration and low barriers to entry. Most brokers are currently focused on winning retail market share and building their client bases.

According to Maybank Investment Bank, most brokerage players in Vietnam have high betas, which means they usually underperform the broader market in a downward trend and vice versa. Despite recording stable, and in some cases, more than adequate earnings, leaders in the segment have underperformed the VNindex since the correction started this year.

The sector itself has corrected c.-42 per cent YTD versus the VNindex’s -22 per cent. This has presented investors with an attractive opportunity as there are many companies in the sector with strong fundamentals and promising outlooks. These stocks could be major outperformers when the current liquidity trend reverses.

In addition, the nascent capital market also offers potential aplenty. Specifically, underlying Vietnam’s growing middle-income economy is a very underpenetrated capital market, which offers substantial opportunities for brokerage businesses.

There has been a strong demand from retail and institutional investors and corporates for more complex financial solutions. This includes investments like stocks, investment-linked products, and mutual funds as well as a wider range of fundraising methods such as IPOs and placements, which have never been popular before. The country is also a hotspot for mergers and acquisitions in the region, ranking 3^rd in ASEAN and providing fertile ground for advisory businesses.