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Securities companies: Powerful bodies marching forward, weak retreating
Securities companies are now moving the opposite way. Powerful companies are marching forward when trying to expand networks, while those unprofitable have been retreating.
Expanding networks
Experts said that there are only twenty securities companies that are financially capable thanks to powerful shareholders, who are also powerful legal entities.
Wall Street Company has officially launched the OTC trading floor into operation. This is one of very few securities companies which have expanded operation in the current difficult period.
Leaders of the company believe that the trading floor will serve as a new playing field to attract the investors who have money and commodities. They said that the problem now is to create opportunities to improve the liquidity of the market.
According to Pham Diem Hoa, General Director of the securities company, there are 1,000 public companies and hundreds of joint stock companies which will become public companies in the time to come. Therefore, it is necessary to create a trading floor, where investors can meet each other easily, purchase and sell the share items which are still not being transacted on the official buses.
Hoa has revealed that the company plans to expand its operation and increase capital to VND 1.85 trillion.
“Investors’ confidence on the market has been shaken. But this is not the reason for us to go back. We need to move forward. Pushing up transactions and giving liquidity to OTC securities proves to be an opportunity for us,” Hoa said.
Another securities company has also made the move which seems to be unsuitable to the current difficult conditions. In late 2008, when a lot of companies were worried that they could not arrange enough capital to increase capital, An Binh Bank’s Securities Company decided to raise capital sharply from VND 330 billion to VND 397 billion.
There are 95 operational securities companies, while only tens of companies are profitable. The average loss securities incurred in 2008 was VND 14.2 trillion.
An Binh Securities said that the company will continue expanding network and make heavy investments in technology in this year. ABS has been successful in applying online transactions, becoming one of the first companies applying online connection with HASTC (the Hanoi Securities Trading Centre) and is ready for online connection with HOSE (HCM City stock Exchange).
Meanwhile, Saigon Securities Incorporated said that in 2008, though facing a lot of difficulties, the company still retained qualified employees and did not cut down the pay fund, while it has been spending money on training, preparing for the new good stage of the market.
Selling companies at reduced prices
A lot of companies reportedly cannot increase capital as required by the laws, accepting to see their services cut.
It is very difficult to raise capital, especially for the securities companies which are not backed by banks. There are two options for securities companies; either to raise capital, or cut services, while the second option proves to be the choice of many companies.
Most recently, SeABank Securities and Habubank Securities thought that by being backed by two commercial banks, they still cannot increase their chartered capital to VND 300 billion to be eligible to provide four kinds of services. The companies have accepted to have the service of securities issuance guarantee revoked.
More difficult companies have to accept to provide one service only, securities brokerage, including Thai Binh Duong (pacific) and Tam Nhin (HRS), as companies need to have only VND 25 billion in capital to be eligible to provide that kind of service.
According to the State Securities Commission, many applications for cutting down operations have been on the table of the committee, as companies cannot persuade their shareholders to spend more capital.
Many companies have to accept sell parts of stakes, or call for foreign investment with the conditions which are considered ‘easiest than ever.’
Tiger Invest, specializing in M&A services, said that his company has received several requests for seeking foreign partners.
Several days ago, Gia Anh Company, established in December 2006, advertised in newspapers that it needs to sell 80% of chartered capital. Some investors, who have injected money in securities companies, now also want to withdraw investments. Indochina capital, for example, has transferred its capital contribution in Mekong Securities Company.
Phuoc Ha
Vietnamnet
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