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Securities companies: 50, 40 and 10?
Bao Viet Securities Company BVSC, one of the biggest names in Vietnam, has estimated the loss of VND400bil for last year. BVSC’s Deputy Director Pham Quang Huy believes that 80% of securities companies lost money in 2008, while they have been warned about another difficult year in 2009.
50% will still face difficulties
Meanwhile, Dang The Duc, Managing Partner of Indochine Counsel law firm, has predicted that 50% of operational securities companies will continue to meet difficulties, 40% will be okay, while 10% will develop to become big names in 2009.
According to Duc, securities income comes from brokerage services, financial consultancy and depository services, and from trading activities themselves.
Duc believes that brokerage activities will bring stable income to securities companies if the companies have good technology and can provide good products and services for investors.
However, the number of securities companies that can meet the requirements remains modest in Vietnam, just 10% of total companies.
Meanwhile, trading activities will decide the existence and development, or the fall, of securities companies in 2009.
Financial consultancy will be one of the key services of securities companies. However, the field is expected to be gloomy in 2009 as a result of the global financial crisis.
More IPOs will be carried out in 2009. However, the fees securities companies will be able to collect will not be big, the biggest market share will fall into the hands of big securities companies with good brand names.
Most experts lean towards the viewpoint that the operations of securities companies in 2009 will greatly depend on the conditions of the national economy and the recovery of the stock market.
As macroeconomic factors are believed will remain unstable and listed companies are believed will continue to face difficulties in the first half of 2009, Huy from Bao Viet Securities Company said that the first half of 2009 will still be a difficult period for securities companies.
However, Huy thinks that the market will see the first signs of recovery in Q3 and Q4.
Though he thinks that many securities companies will continue suffering losses in 2009, Huy is reserved when talking about the likelihood of companies going bankrupt. He said that this will depend on companies’ shareholders. If shareholders are willing to accept losses for 1-2 more years, bankruptcy will not occur.
Go bankrupt or merge?
It seems as though merging with other securities companies to become stronger would be a suitable solution for certain companies in the current period.
Experts have predicted that 2009 will witness a lot of merger and acquisition (M&A) cases, which will bring opportunities to companies to expand their brokerage market shares.
However, Nguyen Duc Thinh, General Director of Gia Phat Securities Company, said that M&A proves to be a good solution, but it is not easy to carry out in the context of the gloomy market.
Being a lawyer specialising in M&A in Vietnam, Duc believes that there will not be many M&A cases in 2009, and the difference in technologies of securities companies will serve as the biggest hindrance to the M&A process. Moreover, differences in corporate governance and culture will also hinder M&A affairs.
According to Le Anh Thi, Consultancy and Analysis Director of Au Viet Securities Company, most securities companies in Vietnam are young, so the value they can offer each other in M&A cases is very low.
“Who wants to take over unprofitable investment portfolios?” Thi asked.
TBKTVN
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