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Securities companies making loss and struggling to survive
80% of securities companies had reportedly incurred losses by the end of 2008, and many of them have been facing dissolution.
Big losses
Kim Long Securities Company has predicted that the company might incurred the loss of VND300billion in 2008, which has upset many investors who have injected their money in Kim Long shares (KLS) which are being listed on Hanoi bourse. The loss was brought about by the stock trading activities of the company.
However, Kim Long Securities Company is not the only company which incurred severe loss in 2008. Nguyen Thanh Ky, Secretary General of the Vietnam Association of Securities Business (VASB), said that up to 80% of securities companies incurred loss in 2008 with the loss from several billions to several hundred billions of VND.
Pham Huy Duong, Analysis Director of Hoa Binh Securities Floor, said that except the big securities companies, which are backed by big banks like ACB Securities, Sacombank Securities, and Agriso, other companies which traded shares themselves and purchased shares at high prices have all been incurring losses.
Duong added that the stock prices have been decreasing, while the companies all have to pay high prices for business premises, salaries to employees, and investments in technologies which cost VND 12-15 billion a month.
Despite the big difficulties, the Saigon Securities Incorporated (SSI) still could make a large profit in 2008. SSI’s Chairman, Nguyen Duy Hung, has announced the profit of nearly VND 300 billion in 2008 which he said was brought about by the investments in bonds.
Struggling to survive or get dissolved?
The strong restructuring is being carried out in a lot of securities companies, including SSI, FPTS, IRS, Trang An, Tan Viet, and VN Direct.
In SSI, some employees who were recruited at the time when the stock market was in the hot development period, have left for other jobs. An SSI’s manager said that the market was hot and the company had to recruit employees which really could not meet all the requirements set by the company. Therefore, it is now the right time to restructure the organization.
FPTS, which once recruited a record number of auditors to work in the analysis division, has seen a half of them leaving. In IRS, one key person is now in charge of several divisions.
Meanwhile, securities companies have been urged by the State Securities Commission to complete and report about the capital increases. Under the new regulations, securities companies which provide three services (investment consultancy, brokerage, securities issuance guarantee) and make trading activities themselves, must have the minimum chartered capital of VND 350 billion.
Ky from VASB said that in 2007, he once asked to stop licensing securities companies. However, 100 securities companies have still been licensed so far. Meanwhile, China, a larger country, has only 70 securities companies, 41 in Taiwan, and 37 in Thailand.
Ky added that it is nearly impossible for securities companies to increase capital at this moment, and that the State Securities Committee and the Ministry of Finance need to give support to help them survive.
Tien phong
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