70 per cent of Securities Firms Want to Sell Stake to Foreign Investors

An estimated 70 per cent of domestic securities companies are seeking to sell part of their stakes to deal with great difficulties currently but they have gained little attention from foreign investors, the Ho Chi Minh City Law newspaper reported.

 

The foreign indifference is attributed to their desire to invest in leading securities companies in Vietnam and they are waiting for proper time to disburse capital, the newspaper said.

 

Vice Chairman of the investment fund TNK Capital Partners Huynh Thanh Hai said a single stock broker spends average VND500 million each month to maintain operation while its monthly revenue is only VND20 million. Due to great loss, they have no other choice but sell stake to increase the financial capacity.

 

The Vietnam Association of Securities Businesses (VASB) reported up to 80 per cent of the total of 98 securities firms operating in the country must cut staff and salary to keep alive.

 

The VASB last week sought the approval from the Ministry of Finance and the State Securities Commission for a delay in the deadline for stock brokers to make the compulsory increase in equity until June 30 of next year.

 

The move is aimed to help ease disadvantages for them at this time when the stock market has been in a prolonged downturn and the economy is in turmoil, VASB said.

 

As planned, a firm that is both a broker and which engages in trading on behalf of institutional investors will have to have a minimum capital of VND125 billion, which is effective from December 31 of 2008.

 

The VASB figured that currently 35 securities firms do not meet the capital requirements, and they will need an additional VND7 trillion (US$424.2 million) by the end of this month to meet the deadline.

 

The VN-index broke the psychological threshold of 300 points to touch 288.69 today [December 8], down nearly 70 per cent so far this year. (HCM City Law, VNA)