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Not having much living space, small securities companies get suffocated   2012-07-22 - VietNamNet

Ninety five securities companies have to compete fiercely with each other to scramble for the small 40 percent remaining brokerage market share, while the other 60 percent has been controlled by a few big companies.

 
Securities companies keep secretive about their business

While big securities companies such as SSI, HCM, VDS, VND and BVSC excitedly report their satisfactory business results for the first six months of 2012, medium and small companies still keep silent. The most updated information investors have got is the turnovers and the profits of the first quarter of 2012, provided by listed securities companies.



Especially, ASC, Alpha, Woori CBV, Viet Quoc have not released the business results for the first two quarters of the year. Meanwhile, Hoang Gia, Toan Cau, Me Kong and Rubber Securities Company have been absolutely silent. No finance reports, no annual reports have been shown on the official websites of the company for investors to consider. The website of a securities company was inaccessible.



There are 105 operational securities companies, but only a few of which can live well. Brokerage, consultancy, depository services and securities trading activities have never been the main sources of income for the majority of securities companies.



Nearly 70 percent of the income of AVS in the first quarter of 2012 came from other services. The same figures have been reported by VIX and APG. As for WSS (the Wall Street Securities Company), the Q1 finance report showed that 89 percent of the revenue of WSS was from other sources.



“Other sources” here means the income from the interests and finance services (repo service, for example). However, experts have warned that the important sources of income may put securities companies under high risks.



The risks prove to be higher for the small companies with modest capital and risk management experience. Ha Thanh, and SME Securities Companies have been cited as typical examples.



The State Securities Council (SSC) is drafting a Ministry of Finance’s decision stipulating the organization structure and operation of securities companies.



Under the draft, securities companies would not be allowed to invest in real estate projects. They would not be allowed to hold more than 20 percent of the circulating shares of a listed institution or 15 percent of capital of an unlisted company. The total money borrowed or lent of the companies must not be three times higher than their stockholder equities.



Experts have warned that if the draft regulation comes true, this would help securities companies to control their operation and ensure the safety, but would put big difficulties for small companies.



Still having to live

Most of the small securities companies have been trying to cut down expenses. AVS, for example, has reduced the business cost in the first quarter of 2012 by six times to 3 billion dong. Especially the company has vowed to reduce the total expenses from 69.5 billion dong in 2011 to 8 billion dong in 2012.



The method would help AVS make profit in the current difficulties. However, this also means that AVS has scaled down its operation significantly.



Other companies have been making every effort to increase the chartered capital. ASC, for example, has raised the chartered capital from 36 billion dong to 56 billion dong. The only buyer of the additionally issued shares is Phan Minh Hoan, President of ASC, who has raised his ownership proportion from 40 percent to 65.29 percent.



Nhat Viet Company is seeking new investors who can buy more than 51 percent of stakes of the company.



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