Brokerage Sector: Geared to the market recovery in 2Q20

VN Brokers — Geared to the market recovery in 2Q20

What’s new?
► The sector has outperformed the VNI by 10ppt since the March low.
► Weak proprietary trading results in 1Q20 could give way to substantial gains in 2Q20.
► The competitive inroads made by foreign brokers continue apace.
► The outlook for institutional brokerage and investment banking looks better in 2021.

Our view
► We maintain a broadly positive long-term outlook for the Vietnam capital markets.
► But brokerage profitability is under pressure from intense competition.
► Earnings should recover given the market’s sharp rally in 2Q20. SSI is the most geared to prop trading.
► HCM remains our top pick and only BUY in the sector.