Vietnam - The securities companies which narrowly escape death

VietNamNet Bridge – A lot of securities companies, which were believed to “have problems” surprisingly were not named in the “black list” just released by the State Securities Commission (SSC).

On April 23, SSC made public the list of the securities companies put under the special control by the watchdog agency. These are the weak securities companies (3rd-group securities companies) with the ratio of usable capital on total risks at less than 120 percent, and the accumulative loss accounting for more than 50 percent of their chartered capital.

Contrary to all predictions, the “black list” is relatively short with just six names, including the Rubber Securities Company, Vina, Hanoi (HSSC), Truong Son (TSS), Da Nang and Me Kong. Meanwhile, one would not find the names of many companies which have been incurring loss for the last many years, and the ones which once faced serious liquidity problems.

A lot of the names, which are familiar to investors because of the bad records, did not appear in the latest list.

HRS and VIT are the two typical examples. Both of them have been taking loss for the last five consecutive years. HRS has the gross loss of 45.8 billion dong

Meanwhile, KIS and Navibank Securities were also unnamed in the black list, even though they both have been taking loss in the last four consecutive years.

Especially, the names, which were once the focus of the public’s discussion for the loss of liquidity, like SME and TAS were not found in the black list. People also could not find the names of the companies, which met such big difficulties that they had to stop providing brokerage services and have nearly disappeared from the market without sending back any news, like Gia Anh (Hamico) and DDS.

SBS has emerged as a new name that has caused worries among securities investors. In the last three trading sessions, investors bargained away SBS shares after the company reported the huge loss in the first quarter of 2012 after it took a big loss in 2011 already.

SBS reported the loss of 660 billion dong in the first quarter, raising the accumulative loss to 1400 billion dong, which is even higher than the chartered capital of 1266 billion dong.

Prior to that, President of SBS Nguyen Ho Nam admitted in mid 2011 that SBS was in crisis and it was facing the bankruptcy. However, Nam also said SBS would not bear the loan interest and liquidity pressure any longer from April 1, 2012

A lot of other securities companies also reportedly incurred huge losses in 2011, including VDS (-126 billion dong), HPC (-94.7), TLS (-592), ORS (-40.9), AVS (-40.5), APS (nearly 92 billion dong).

However, despite the big losses, the absence of their names in the black list does not surprise people, because the unprofitable companies are still much better than many above said companies.

In a recent move, the Vietnam Association of Financial Investors (VAFI) has proposed to cut down the number of securities companies to 25 to ensure the investors’ interests, saying that more than 100 companies is too much for a small stock market like Vietnam.

The watchdog agency also believes that it’s necessary to cut down the number of securities companies by 30-70 percent.

However, experts have warned that it would be very difficult to eliminate the companies, even though many companies have scaled down their operation, and others do not maintain their activities on the market, with no head office, no website and no contact telephone numbers.

Manh Ha

Business & Investment Opportunities 
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