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Weak securities companies will be swallowed
The fact that many securities companies are working perfunctorily and some of them are on the verge of bankruptcy has made people think a new wave of securities companies being swallowed is on the way.
A financial expert said that the age of securities companies was over. The race to find staffs for securities companies has finished, while the advertisement pieces in newspapers seeking qualified staffs for securities companies with attractive salaries have disappeared. Many securities companies are incurring losses as the falling stock market has been making their trading activities unprofitable.
While many securities companies are facing big difficulties, foreign financial institutions are eyeing them. Explaining why foreign institutions want unprofitable Vietnamese companies, the expert said that it takes much more time and energy to set up a new company than to buy an existing one.
Under current regulations, only securities companies are allowed to provide services of guaranteeing companies’ stock issuances, while financial institutions, including banks, can only provide services of guaranteeing bond issuances. It is expected that in the future, the stock issuance guarantee will be the ‘biggest piece of cake’ foreign financial institutions will crave. The number of clients who need to use the stock issuance guarantee will be very big, especially as more and more big Vietnamese companies plan to list on foreign bourses.
Most recently, investment bank Morgan Stanley purchased stocks of Huong Viet’s Securities Company and renamed the company Morgan Stanley Huong Viet Securities Company.
Sources say that Malaysia’s RHB will buy 49% of stakes of Vietnam Securities Company. Moreover, a lot of other deals in which 10% of stakes of securities companies are sold to foreign investors have been inked.
Nguyen Van Vinh, an investment expert on the New York Stock Exchange, said that despite current difficulties, Vietnam’s stock market still promises a lot of business opportunities for foreign financial institutions. To date, only around 300 accounts have been opened in a market with more than 80mil people, and the figure proves to be low compared to the potentials.
Not only foreign institutions are eyeing securities companies, domestic companies are also planning to swallow weak securities companies. Dr Hoang Xuan Quyen, Investment Analysis Director under Tan Viet Securities Company, said that it is absolutely possible that big companies are seeking to swallow smaller companies.
Sharing the same view, Dr Nguyen Duc Thanh said that by taking over smaller companies, big securities companies will expand their operation networks and labour forces in just a short time.
Thanh said that it is the right time for the Ministry of Finance to promulgate documents guiding the merger and acquisition of securities companies, as this will be the growing tendency in the near future.
In related news, the Refrigerator Engineering Enterprise (REE) in early 2008 withdrew its application to set up REE Securities Company, though the company had received approval in principle. REE’s decision was considered a wise move, as the market’s falls could not have ensured the smooth operation of the company if it had been established.
VNN
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