When searching online about stockbrokers in Vietnam it is difficult to come across useful information. Articles on the topic are often from a perspective of a Vietnam citizen perhaps looking to add some global stocks on foreign markets for them. Seems like the articles are written by robots and mention the big global brokers, who usually are not useful for trading in Vietnam stocks. Or perhaps the articles push you to financial market spread betting companies with “colorful” reviews and reputations.
In this blog post I will focus on factors to weigh up if looking for a broker based in Vietnam to trade on the Vietnam stock exchange.
HOW TO INVEST IN THE VIETNAM STOCK MARKET (WHICH BROKER?)
FACTORS ON HOW TO CHOOSE A BROKER IN VIETNAM
- Online access and user-friendly platform?
- Commission rates
- “Other” fees – there can be many!
- What do others say, online reviews and who to believe?
- Is my money safe with the broker?
Online access and user-friendly platform?
The reality is it is not that easy to assess the “usability” of a stockbroking site until you spend quite a few months actively trading yourself. That can be a dilemma because you don’t want the hassle of opening up 5 different stockbroking accounts just to give them a test run. Even if you didn’t mind the hassle, it is not cost efficient as I will touch on later. Vietnam stockbrokers often have a charge to either open or close the account, and little charges if you need to chase up for example a historical report on trading activity.
So how can we get a feel for which stockbroker’s user platform suits our needs? One thing I would suggest is to visit the broker’s website, you can expect to see an English version. The large brokers are certainly attuning to the opportunity to capture clients who would only use English. Also they regularly have detailed downloadable documents that give examples of screenshots of how trading is done on their user platforms, or short video demonstrations. Expect to see mobile app versions of trading platforms.
Personally I would be cautious for super active traders in for example their liquid home markets of the US to suddenly take an active approach to the Vietnam stock market. Fees and liquidity can be a headwind. For that reason, although I see some Vietnam stockbrokers also have more sophisticated techniques such as stop loss, conditional orders etc. in their capabilities, I wouldn’t place too much focus on that.
I also don’t place a big weight on any published research capabilities that might come along with being a client of these stockbrokers. For example, research on individual stocks in Vietnam, or macro research. The former is often biased, and the latter often is not conducive to achieving better investment returns. I would focus more on how the platform looks in terms of whether it is under friendly when it comes to placing basic orders on the stock market.
I would note that some stockbrokers based elsewhere in Asia have the capability for clients to invest on the Vietnam stock market. Usually when going via that route it will be phone orders and no online platform to DIY. That actually might be fine for someone who only plans on trading in Vietnam stocks very infrequently. Going via a broker based outside of Vietnam however will be a bit more expensive in terms of regular charges which I shall touch on next.
Vietnam Stockbrokers Commission rates
Firstly when it comes to commission rates, let me just finish off on above where I referred to trading the Vietnam stock market via a broker outside of Vietnam. I have seen some other Asian brokers that allow this via phone but with this method I would expect to see the rate circa 40-50bps on a trade. I mean if you already have such a broker set up, from a convenience perspective that could be the best option. You also have to be quite careful on FX conversion rates the more indirect route you take. It is not uncommon for a broker to effectively charge 2% on each leg on such a trade in FX costs.
A stock broker based in Vietnam should be cheaper though when it comes to the brokerage rate. It could also be cheaper FX wise, although it is hard to generalize too much as each individual’s circumstances are different. i.e. where are you funding the initial funds from, how often may you want to get the funds back to your own currency, etc.
In terms of a brokerage rate from the leading Vietnam stockbrokers, I will break it down as follows. When you are trading amounts of comfortably above USD $20K, you could expect a brokerage rate of 25bps.
If you wanted to execute very small volumes, say below USD $5K, the rate will be higher potentially 35-40bps.
For trade sizes in-between the above there will usually be charges in-between for certain trade size ranges.
Stockbroking fees in Vietnam – “Other” fees – there can be many!
I touched earlier on potentially losing 4-5% a trade on FX roundtrips on using some Asian brokers as they give you access to trade different Asian markets such as Vietnam. It is a bit beyond this blog post to go into detail about the entire world of banks and expensive FX rates. That would be a blog post within a blog post! The main point I will make though here is that if you are a foreigner in terms of the Vietnam stock market make sure you don’t forget about this aspect. From a personal perspective I can say that when money is switched between VND and USD (internally within Vietnam) the charges there can be very small and reasonable at least. A bigger consideration might be with your initial funding to USD if that is required.
Another charge that might be somewhat “hidden” for investors, are more fixed charges that stockbrokers have. Some might label them as account opening / closing charges, custody or “dividend handling” charges, extra statement charges, “inactivity” or yearly charges. From my initial research I got the impression holding a USD $15k parcel in a Vietnam stock might incur custody type charges of circa $5 a year per stock. As I openly admit on this blog regularly, I write about aspects that I may not necessarily as yet have direct experience in and this is one. So feel free to write in the comments thread below if anyone has any direct experience with this. The stockbrokers I did do a bit of research on I didn’t see any yearly ongoing or inactivity charges, I saw usually a closing the account charge but was tiny so hardly worth mentioning. Some small charges if you request trading statements however I think so long as you save online your initial trading contract note I wouldn’t expect you need to get hit by such charges.
One key objective of this blog overall though was it would eventually give some perspective on these sort of topics from someone who had direct experience. In the medium term expect me to given an update on these matter as I eventually use a Vietnam stockbroking account myself. I encourage for that reason to subscribe to my future blog posts by entering your email in the relevant section. You can see that I don’t spam your inbox, might only be one update a week. The idea is so some can follow my journey of actually spending some time in Vietnam doing this stuff. That is as opposed to so many articles you see via google searches these days written by robots with no practical experience.
Overall the Vietnam stockbrokers seem reasonable in some of the smaller “hidden” type charges. All brokers generally from a global perspective tend to have some aspects of these little extra costs. Some of the Asian brokers that give you a decent range of Asian markets to access, I found had a general fixed charge of circa $50-100 a year to maintain the account.
What do others say, Vietnam stockbroker reviews online, who to believe?
It seems intuitive to search for online reviews to make your decision about who is the best Vietnam stockbroker to use. In fact, it is quite possible you have come across this article via searching this exact thing on google already!
So why then I am going to advocate a lot of caution about doing this?
Don’t get me wrong, I still think it makes a lot of sense to do this. I think you can regularly spot a lot of comments on various discussion forums these days that are often genuine comment from real customers about their user experiences.
Just be wary of fake reviews, or biased reviews from those with affiliate relationships. If a discussion forum shows a user joined up and only suddenly posted comments how great a broker is and to join up well that probably is a red flag.
If the website operator is making lots of income from affiliate income, writing a glowing review about a stockbroker with links pressuring readers to sign up, even though it is unlikely the writer uses the broker themselves, again could be a red flag.
I realize it is often not possible, but if you happen to personally know someone that has used a stockbroker and happy with them, that is the ideal review to act on.
Is my money safe with a Vietnam stockbroker?
In various developed economies investors are often used to certain mandated protection laws to help the smaller investor in terms of protection. Think of insurance schemes if the broker went bankrupt and the broker had all stocks in their name, or client’s cash deposits, governments might ensure the smaller investor is covered up to a certain amount of any potential losses.
When investing anywhere in the world, one should contemplate such outcomes. As you move from the most developed stock markets in the world, to the frontier markets like Vietnam, as a general rule of thumb you should lower your expectations in terms of investor protection.
The ways I would tackle this issue is to firstly not place too much capital with one broker. If Vietnam equites are only a very tiny part of your wealth well picking the one broker makes sense. If you are taking a huge bet on Vietnam stocks diversifying to include more than one broker might be more suitable.
Secondly one could stick to the Vietnam stockbrokers that are more established. For example a few Vietnam stockbrokers I mention below are usually the ones that dominate the market share tables. They happen to be very prominent companies in terms of size that are listed on the Vietnam stock exchange. Even on the investor relation section of their websites you can usually find annual reports in English if you wanted to do some due diligence on their financials.
Below I just copied some snippets from their websites that touch on their history / objectives etc. to give a bit of color about their backgrounds that you may find useful.
LIST OF LARGEST STOCKBROKERS IN VIETNAM
- Saigon securities Incorporation (SSI)
- Ho Chi Minh City Securities Corporation (HSC)
- Viet Capital securities Joint Stock Company (VCSC)
vietnam stockbroker comparison
Saigon securities Incorporation (SSI)
“Established in December 1999, it is one of the oldest operating companies in Vietnam Stock Market. After 20 years of operating under the market mechanism, the Company has grown to become the largest financial institution in the market, with the fastest growth rate with charter capital increased more than 1000 times.
With strong financial potential, corporate governance activities according to international standards, strong and professional staff, SSI always provides customers with superior and comprehensive products and services, ensuring maximum shareholder benefits.
Currently, the company has an extensive network of operations in major cities across the country such as Hanoi, Ho Chi Minh City, Hai Phong.”
Ho Chi Minh City Securities Corporation (HSC)
“Ho Chi Minh City Securities Corporation (HSC) is a leading and award-winning professional securities brokerage firm in Vietnam. HSC provides a comprehensive suite of financial services to institutional & private clients. We focus on professional investment advisory services backed by a highly recognized research team.
With a strong track record in connecting corporate clients with global and local investors, we serve the needs of individuals, institutions and corporates through our four business divisions: Brokerage, Research, Investment Banking and Principal Investment.”
Viet Capital securities Joint Stock Company (VCSC)
“Viet Capital Securities (VCSC) is one of the fastest growing securities companies in Vietnam, with a leading investment bank and a top brokerage house. VCSC has consistently been named Best Investment Bank in Vietnam by Finance Asia and EuroMoney. VCSC’s share of the brokerage market has also been in top 3 since 2013. Its philosophy is grounded in building long-lasting relationships with clients.”
Once again for full disclosure I openly admit to my lack of experience at this point in time to transacting with such stockbrokers based in Vietnam. I thought followers could benefit though from this article anyway, as these are my thoughts after doing a lot of reading and early investigation. I suspect that this time next year I may well have some direct practical experiences to share. As usual thoughts welcome. Feel free to share your comments below especially if you already have experience with Vietnam stockbrokers or are looking to open accounts with them soon.
HOW TO OPEN A STOCKBROKING ACCOUNT IN VIETNAM
By the way, for those who are interested in more of the mechanics about getting a stockbroking account open in Vietnam, you can visit a previous blog post of mine here..
Is Vietnam a good investment?
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