In 2007, the top five securities companies all attained big profit. SSI had the post tax profit of VND864bil, ACB Securities VND332bil, BVSC VND214bil, KLS VND126bil.
However, these companies were not so prosperous in the first nine months of this year. Of the five, SSI fulfilled 49.36% of its yearly plan with the post tax profit of VND230bil. Meanwhile, KLS got the modest profit of VND3.6bil, and BVSC reported the loss of VND300bil, and HPC the loss of VND85bil.
The main reason for the poor performances of securities companies is the continued sharp falls of the stock market, which have precipitated the departure of many investors, while the number of securities companies has been increasing.
Statistics released by the HCM City Stock Exchange (HOSE) and Hanoi Securities Trading Centre (HASTC) show that the total value of stock transactions of securities companies from the beginning of the year until the end of October was CND156,996bil (VND15,696bil/month).
As securities companies have been both purchasing and selling, the total monthly stock transaction value of the securities companies is VND15,696bil x 2 = VND31,393bil. This spells that on average, one securities company has the monthly transaction value of VND31,393bil/99 companies = VND317bil.
APEC’s analysts say that the turnover from the monthly securities brokerage service of every securities company is VND317bil x (0.2% - 0.03%) = VND539mil (0.2% is the fee companies collect from clients, and 0.03% is the fee companies have to pay to securities trading centres).
Meanwhile, the monthly expenses securities companies have to pay (workshop premises, salaries, asset depreciation and others) total around VND1.5-2bil.
If the current conditions are not improved, Vietnam will see many securities companies on the verge of bankruptcy, the report by APEC states, adding that only the top 20 securities companies will survive.
Government’s help called for
Two questions have been raised amid the dismal performances of securities companies: Will there be a massive merging of securities companies in the time to come? What measures should Vietnam employ to help securities companies overcome the troubles?
Nguyen Thanh Ky, Secretary General of the Vietnam Association of Securities Businesses, believes that wide-scale merging will not occur. Ky said that both big and small companies are facing difficulties nowadays. In the world, even big institutions like Citigroup need the government’s support. In this case, support from governments is a necessity.
Ky mentioned the proposed collection of personal income tax from securities investors, saying that taxation at this sensitive moment would make the market worse, as investors would sell stocks in order to avoid the onset of the tax, slated for January 1, 2009.
Securities companies have been trying to rescue themselves by restructuring their organisations, cutting superfluous jobs and closing branches. However, Ky still believes that the companies need the support of the government.
There are many things the government can do to help, he says. It can lower transaction fees, remove the requirement on installing cameras for transaction supervision and magnetic doors. Especially, it can ease the regulation on the compulsory trading floor space (the minimum area of a trading floor is now 200 sq m).
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