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Market remain lackluster, securities companies incur loss in masses
A Ministry of Finance’s report which has been released recently shows that most of the securities companies incurred loss in the first six months of the year, which is not a surprise to any one at all.
The current economic difficulties have been badly affected all sectors and branches in the national economy, while securities companies prove to be the biggest sufferers.
Twenty securities companies reported loss in 2010, while the figure rose to 62 out of the 105 operational companies in the first quarter of 2011. The total number of companies which have accumulative loss to date has reached 61 out of 105.
Securities companies have blamed their unprofitable business on the lackluster stock market, which has made the revenue decrease dramatically, while the amount of money they have to pay for provisioning against the stock price decreases was very high.
Meanwhile, a lot of securities take time of the current quiet period of the stock market to upgrade their business activities by restructuring capital, strategic shareholders, renovating operations, technologies, personnel and organizations.
Therefore, the chartered capital of securities companies has increased by 883 billion dong in comparison with late 2010 to 35,405 billion dong. While many companies have to cut down branches and transaction points, other companies have expanded their network. By the end of the first half of 2011, the number of securities companies’ branches had risen to 157, while the number of transaction points to 96.
The state management agencies have emphasized that all securities companies have followed the strict regulations on financial safety (Chartered capital, usable capital). The State Securities Commission SSC has classified securities companies, while it has also build up the plans to restructure securities companies, under which the number of companies would decrease, companies would have to cut down some of their operations.
SSC has also issued a new financial safety management and risk management system.
Do Huy Hoai, Deputy Chair of the BIDV’s Securities Company, has admitted that the competition among securities companies has become fiercer than ever. He thinks that the massive bankruptcy of securities companies would not happen in the second half of 2011. However, in the current difficulties, many companies will have to narrow their operation scale, or merge into other companies, or get swallowed by more powerful financial institutions.
Like securities companies, investment fund managers have also been facing great difficulties.
In the first six months of 2011, 27 out of 47 companies reported loss, while the figure was 22 out of 47 in 2010. During the same time, only one investment fund increased its capital by 179 billion dong. The total net value of investment funds had dropped by 960 billion dong in comparison with late 2010 to 11,372.8 billion dong.
SSC has sent a dispatch to fund management companies, recommending the 10 companies with big losses (Of 30 percent of chartered capital and higher) to keep cautious in their investment activities. SSC has also requested them to apply the risk management procedures, build up the plan to increase capital in order to meet the new requirements in financial safety.
In the first month of 2011, the stock market witnessed the increase in the number of unlisted public companies and the increase in the number of listed companies on the two bourses, and increase in the volume of capital mobilized through the stock market.
By the beginning of June 2011, SSC granted registration certificates to 54 public companies, raising the total number of unlisted public companies to 994. To date, 673 companies have listed their shares at the Hanoi and HCM City Stock Exchanges.
The number of investors’ accounts has increased by 47,000 to 1,103,184, which includes 4490 institutional investors’ and 1,098,694 individual investors’ accounts.
vietnmnet, TBKTVN
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