Citigroup Inc. (C) is expanding its business in the Asian countries. The company acquired a 9.9% stake in Horizon Securities Corp., a Vietnam brokerage company. Financial terms of the deal, which is subject to regulatory approval, were kept confidential.
Headquartered in Ho Chi Minh City and founded in 2006, Horizon Securities is a privately held firm that offers brokerage and corporate finance services. It is a unit of Horizon Capital Group. This stake purchase includes Citi among the first foreign financial institutions to partner with a local Vietnam securities firm.
The expansion in the Vietnam market reflects the expectation of a rebound in its economic conditions and stock market in the days ahead. The country is currently experiencing high inflation and its stock market is trading low. However, the region is still largely unexplored and Citi aims to gain through such strategic expansion initiatives in the untapped market. Citi intends to lead the secondary market and grow its share of institutional investor equity flows in the Vietnam market.
With prospects for growth in the Asian countries, a number of U.S. and U.K. banks are expanding their businesses in the region. Citi is focused on expanding its business in the Asia Pacific region, which is an important contributor to the company’s global business growth. The region generated around $45 billion of revenues and $15 billion in net income in the prior three years.
Earlier in June, Citi also entered into an agreement with China's Orient Securities Co. to set up of an investment banking venture. Besides Citi, Royal Bank of Scotland Group Plc. (RBS) and Guolian Securities Co. Ltd. also launched a joint venture (JV) – Huaying Securities Co. Ltd. – in May. Morgan Stanley (MS) also announced the launch of its JV with the Chinese securities’ firm China Fortune Securities Co., better known as Huaxin Securities Co.
Citi shares retain a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are maintaining a long-term Neutral recommendation on the stock.
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