|
Stock brokerages struggle to meet payrolls
Stock brokerages and their employees are increasingly among the casualites of the prolonged stock market turndown.
With trading volumes already low, the HCM City stock market ground to a halt this week due to a technical glitch, further putting the squeeze on revenue streams for securities companies.
The director of one securities firm’s HCM City branch said, on condition of anonymity, that many companies were facing difficulties in meeting payrolls for employees whose numbers swelled last year when the market was hot.
"Broker commissions are not enough to cover salaries," he said.
Last year, his company earned over VND40 billion (US$2.5 million) from commissions, with totals sometimes reaching VND300 million (US$18,750) per day. Salary and bonus funds were ample at around VND10 billion.
"Lately, the revenues have been less than VND20 million per day," he said.
His branch has cut back its staff from 30 to 20 as more and more clients stop by the office simply to observe the trading boards rather than to play the market.
The deputy director of a Ha Noi-based securities company who also requested to remain anonymous said that, last year, salaries that securities firms offered newly graduated students were VND4-5 million ($250-312) per month. Now, it was only VND2.5-3 million.
"Big changes are creating good conditions for us to select quality and experienced employees at a much more reasonable cost," he said.
Many securities companies are facing long-term losses, however, if the market remains depressed. A number of them have a large proportion of their own assets invested in shares, many of which have lost 40-50 per cent of their value this year.
Others have poured resources into listing advisory services, auctions and IPOs and share underwriting services, none of which are generating much income during the market downturn.
Among securities companies that have published their business results for the first quarter of this year, Bao Viet Securities reported VND46.7 billion (US$2.9 million) in revenues from its primary business operations and VND5.7 billion from its financial investments in the first quarter. Saigon Securities Inc earned VND350.5 billion ($21.9 million) from securities trading and posted VND128 billion ($8 million) in pre-tax profits.
Both would appear to be healthy in light of the current market climate but seem to have done little overall to raise investor confidence.
State Securities Commission chairman Vu Bang, in a statement sent to the Ministry of Finance earlier this month, said the rapid decline of the market in recent months has caused a number of securities firms to suffer large losses.
Some were considering mergers or acquisitions to avoid bankruptcy, Bang wrote.
Au Lac Securities has sold 49 per cent of its equity to its foreign partner, Technology CX, while Viet Nam Securities has also sold a 49 per cent interest to Malaysia’s RHB Investment Bank for about VND67 billion ($4.2 million).
Likewise, Golden Bridge Investment and Securities Ltd has bought 49 per cent equity in Click&Call Securities, and Singapore’s Morgan Stanley has spent VND145 billion ($9 million) to acquire a 48.3 per cent stake in Huong Viet Securities, renaming the company Huong Viet Morgan Stanley Securities.
Nguyen Van Dung, CEO of Tan Viet Securities Inc, said "We’ll see how long this situation lasts. The way I look at it, it is likely to take four to five years for the market to reach its peak again, so firms must see whether they can hold out and look for opportunities in the meantime."
Despite the tightening revenue picture for securities firms in the first quarter of the year, the number of applications before the Securities Commission to launch new brokerage houses remained high. Among the most newly-established firms were Viet Nam Hop Luc Fund Management Joint Stock Co, AAA Securities, Saigontourist Securities and Tan Tao Securities.
To stem the tide of new firms, the Securities Commission temporarily suspended its acceptance of new applications on April 28.
VNN
|
