Changes in Securities Law and guidance documents mulled

Friday, June 20, 2008
State Securities Commission (SSC) on June 17 organised a seminar to overview the Law on Securities after one-year of implementation. Given public comment that the Law and guidance documents still have some problems needed to be amended.

Information disclosure

Law on Securities and relevant documents have not yet had detailed guidance on operation of share retail of public companies, share sale and listing of foreign entities on the Vietnamese stock market. Meanwhile, in fact, there were some 100% foreign invested companies (with the workforce of less than 100 employees) selling shares to employees and then the share volume was still traded on the informal stock market. Investors in such case will have to face many risks and not be protected whereas the foreign firms do not have responsibilities like domestic firms under current regulations.

We are questioned about legal proceedings relating to foreign enterprises who want to sell shares in Vietnam but it is only answered that Vietnamese laws have not ruled yet, according to Nguyen Vu Quang Trung, deputy general director Hanoi Securities Trading Centre (HASTC).

As estimated, share sales will be tightened up, which also will be enclosed with transaction listing and registration. Decree No 14/2007/ND-CP will be amended that issuers must list and register securities transactions on the formal stock market in parallel with share sakes. This will make changes in so far operations of the informal stock market.

Especially, in order to mass issue and sales of shares with unclear purposes, SSC proposed the finance ministry that securities offering applications must be added approved investment projects and the plan of using capital raised from the public for those projects.

In addition, it is proposed that the regulations on information disclosure should be more particular, including rules on financial institutions and individuals forced to announce information.

For example in Singapore, as an individual that has economic relationship with an enterprise (like one of that firm's director board) also has to announce full information to avoid insider transactions, Trung said.

Represented for PWC Auditing firm, Nguyen Thi Lan again concerned the professional and the trust of audited fiscal reports. She also gave a particular example that her company refused to provide comprehensive auditing service for a corporate, however then that corporate by some way still had an auditing appraisal for its financial report and met full terms to list on the stock market.

Nguyen Vu Quang Trung spoke, the corporate value appraisal needs to be independent because it now depends heavily on enterprises and consultants.

Right time to apply derivative tools

Regarding stock brokerages, the Law on Securities must provides more details on the brokers' position as intermediary finance institutions, Le Hong Khoi�general director of Trang An Securities Joint Stock Co gave his point of view at the seminar.

Securities companies must launch other specifications such as helping investors by lending activity through account depository. So far small investors suffered the most risks because of not protected by financial tools that become popular in the world.

Law on Securities also should expand mentoring over derivative share offerings and the trading market for the kind of share as well as products of new investment funds [fund certificates], Trung proposed again. (Lao Dong)

EuroCapital securities broker joins HOSE

Tuesday, June 10, 2008
Ho Chi Minh Stock Exchange (HOSE) on June 5 recognised the trading membership status of EuroCapital Securities Joint Stock Co on the southern bourse. Earlier, EuroCapital became Hanoi Securities Trading Centre (HaSTC)'s member from May 15.

EuroCapital addressed at Floor 2, Thanh Cong Tower at 25 Lang Ha, Hanoi's Ba Dinh Dist with a chartered capital of 150 billion dong will have full ranges of securities sector such as securities brokerage, securities investment consultancy, securities self trading, securities depository and corporate finance consultancy.

At present, the company has been providing enough utility trading services like online transactions via internet, making orders trading via telephone, supplying account information via SMS and online shareholders management.

EuroCapital securities broker joins HaSTC

Tuesday, May 20, 2008
The Hanoi Securities Trading Center (HaSTC) recently approved EuroCapital Securities Joint Stock Co to become the 79th member and Ho Chi Minh City Stock Exchange (HOSE) is consecrating the granting of license to the broker to operate on the bourse.

EuroCapital is established by Eurowindow, Lien Minh Investment Joint Stock Co, Decotech High Technology Construction, Investment and Development Joint Stock and individuals.

The Hanoi based broker with a chartered capital of 150 billion dong, licensed to operate in fields of business, brokerage, self-trading, deposit, corporate finance consultancy, listing consultancy, corporate value appraisal, acquitisations and mergers and liquidity. The firm plans to hike the chartered capital to 500 billion dong within 2008.

Hai Phong Securities to hike chartered capital to 300b dong

Tuesday, May 20, 2008
Hai Phong Securities Joint Stock Co (coded HPC)'s shareholders' annual meeting recently passed the plan to scale up chartered capital to 300 billion dong via offering 12 million shares to the shareholders.

The share issue will be divided into two phases. In the first phase, the company would issue 4.8 million shares to the existing shareholders at the ratio of one new share for four shares held. In the second one, HPC would issue 6.24 million shares to the existing shareholders and strategic partners and the remaining 960,000 shares will be sold to the company's employees.

Finance Ministry asked to lower trading fee

Friday, May 16, 2008
The State Securities Commission (SSC) has called for the Finance Ministry to reduce the trading fee for securities firms from .05 percent to .02%, according to the head of the commission’s market development department.

The move will help securities firms overcome difficulties resulting from the strong decrease of stock indexes and the market’s liquidity, the department head Nguyen Son said.

SSC also planned to make a request for reducing trading fees for investors, he added.

A gloomy atmosphere still dominated the Vietnam stock market as the VN-Index at the Ho Chi Minh City Stock Exchange closed the May 16 trading session at 460.04 points, a decline of 6.63 points, or 1.42% over the previous session.

Only 14 shares rallied for gain, while 11 remained unchanged and 129 suffered losses.

Meanwhile, the HaSTC-Index at the Hanoi Securities Trading Centre fell 2.35 points, or 1.65%, to finish at 139.74 points. (VNA)

Kim Long securities broker reports 2.64b dong Q1 profit

Friday, May 16, 2008
Kim Long Securities Joint Stock Co (coded KLS) recently announced the business result in the first quarter of this year with 84.35 billion dong in revenue from stock business and investment, equalling to 24.45% of the year's plan and 2.646 billion dong from after tax profit or 1.06% of the year's target.
This year, the company targets 345 billion dong in total revenue and 250 billion dong from after tax profit.
Ending the trading session on May 14, KLS-coded shares were traded at 17,200 dong per share, losing 500 dong or 2.82% against the previous session with 2,500 shares being traded.

Hai Phong Securities broker to hike chartered capital to 300b dong

Thursday, May 15, 2008
Hai Phong Securities Joint Stock Co (Haseco) recently announced that it plans to scale up chartered capital to 300 billion dong from the current of 192.463 billion dong via offering 12 million shares within this year.

Last year, the securities broker posted 127.088 billion dong in revenue, 72.47 billion dong from pre tax profit and dividend of 20%.

This year, the company plans to change operation mode towards investment banks. Haseco plans to invest US$1.5 million to upgrade information technology system and 100 billion dong to build its new headquarters at No 9, Hoang Dieu S trillion in Hai Phong.

HOSE welcomes Asia and Europe Securities Co

Wednesday, May 14, 2008
Asia and Europe Securities Joint Stock Company (AAS) became the 84 th member of HCM City Stock Exchange (HOSE) and officially began operating on May 14 on the bourse.

The company has a charter capital of 35 billion VND and functions as a stock broker and stock investment consultant.-Enditem
TTA1405.018 Railway Union to reduce accident hot spots
HCM City (VNA) – The Vietnam Railway Union Corporation will spend over 100 billion VND (6.25 million USD) this year to eliminate railway “hot spots,” sites where numerous accidents have taken place in recent years.

The corporation will focus on hot spots in Da Nang and the provinces of Phu Yen, Khanh Hoa and Dong Nai.

Over 480,000 construction projects violate railway safety procedures, according to the corporation.

PetroVietnam Securities looks into financial options

Tuesday, May 13, 2008
PetroVietnam Securities Joint Stock Co continues to raise capital in its second phase as it plans to carry out one of two financial options.
With the first, the company could increase its charter capital to VND500 billion (US$31.2 million) and plan for revenue of VND200 billion, after-tax profits of VND72 billion and dividend payment of 11 per cent.
With the second, the company could maintain capital of VND150 billion and expect revenue of VND110 billion, after-tax profits of VND21 billion and dividends 10%, respectively.

Saigon Tourist Securities broker licensed

Tuesday, May 13, 2008
The State Securities Commission (SSC) on May 8 granted establishment and business license for Saigon Tourist Securities Joint Stock Co (STSC) with a chartered capital of 290 billion dong.
The newly securities broker will have full ranges of securities sectors like securities brokerage, securities self trading, securities investment consultancy and securities depository.s

FPT Securities to offer online OTC trading

Monday, May 12, 2008
The FPT Securities Joint Stock Co introduced its service for the online trading of unlisted stocks, named EzOTC.
Investors can place buy and sell orders on OTC shares from anywhere with internet access after opening their accounts, as well as trade directly without middlemen.
EzOTC will cooperate with EzTrade and EzLink to help investors order and look for online shares and accounts.

MHB securities arm to issue bonds

Saturday, May 10, 2008
Mekong Delta Housing Development Bank's securities arm MHBS recently announced that it would retail three million ensured non-convertible bonds worth 300 billion dong at 100,000 dong par and the selling price of 100,000 dong per bond for the first phase under the bank's payment guarantee.
These five-year bonds have a coupon rate of 10% per annum for the first year and that of following years negotiated based on Vibor interest rate (Vietnam interbank offer rate) on April 5 yearly.
The coupon rate will be paid yearly on May 5 and the principal will be paid once on the mature date.

Securities companies cut staffs

Friday, May 9, 2008
The golden age of securities companies is over. This time last year, companies were trying to recruit more staffs, while they are trying to cut staffs now.

The director of the HCM City branch of a securities company, who asked to remain unnamed, said that the income of the company is not enough to pay staffs.

He said that the brokerage fees the company collects from clients have been decreasing due to the market’s continued falls. “Last year we could earn VND300mil a day and VND40bil a year, while we paid VND10bil to the staffs. Nowadays, the brokerage fee is just VND20mil a day.”

The branch, which previously had 30 brokerage officers, now has 20 only, as the company is trying to cut expenses. The number of investors has dropped by 50%; a lot of investors are going to the trading floor just to explore the situation, while not making transactions.

In fact, securities companies have other sources of revenue, including revenue from share trading activities. However, as stock prices keep falling, the trading activities do not bring profit. Sources say that some companies still hold a huge volume of shares which now have market prices of only 40-50% of the prices at which they purchased stocks.

In late 2006 and early 2007, securities companies noisily expanded networks and opened more branches and transactions points, employing more staffs. The situation is quite different now: many companies have had to cancel their network expansion plans and cut jobs.

Last year, a new staff who just graduated from university was paid VND4-5mil a month, while he is now paid VND2.5-3mil/month only. A company reportedly paid VND1,500-2,000 at least for a division head, and the high pay has become a heavy burden on these companies now.

However, optimistic securities companies’ leaders say that now is a golden opportunity for securities companies to ‘filter’ staffs. Previously, when companies rushed to recruit staffs to serve the developing business, they did not have enough time to examine candidates.

Saigon Hanoi Securities broker expands in HCM city

Wednesday, May 7, 2008
The State Securities Commission (SSC) yesterday May 5 issued the Decision No 320/QD-UBCK approving the Saigon Hanoi Securities Joint Stock Co to set up its branch at 41 Pasteur, Nguyen Thai Binh ward Ho Chi Minh City's District 1.
The branch is allowed to carry out securities activities like securities brokerage, securities investment consultancy and securities depository.

Regulators ban new stock brokerages, fund managers

Monday, May 5, 2008
Viet Nam has too many stock brokerages according to SJC Securities Joint Stock Co general director Huynh Anh Tuan.
"With the current small size of the stock market, the number of existing securities companies is too much," said Tuan.
"In recent months, the number of newly-founded securities firms has been higher than the number of new listings on the bourse," he said.
Eighty-seven brokerage houses currently operate nationwide, giving Viet Nam a much higher proportion of brokerages than other nations in the region.
According to figures from the Economic Committee of the National Assembly, China now has 107 securities firms, Malaysia 37, Thailand 31, Singapore 27 and South Korea 50.
Meanwhile, the applications of dozens more firms are pending at the State Securities Commission.
As a consequence, the commission suspended the acceptance of further applications on April 28, including requests to form new fund management companies.

The interim move was intended to improve the service quality and effectiveness of existing brokerage houses and fund management firms.

Some have argued that the rule was anti-competitive and that the entry of new brokerages onto the market, and the resulting competition, would generate better services.

Many have also questioned the ban on new fund management companies. Fund management companies are professional investment institutions which pool the capital of individuals to invest in securities. Most market watchers believe it is a type of professional institution that should be encouraged, not stymied.

There is wider support in the industry for the ban on new stock brokerages, however, as many have been set up merely as vehicles for companies to trade securities on their own behalf. The end result, however, has been than many brokerage houses are facing bankruptcy now that the stock market has dropped.

Not only have these firms lost money on their own investments, their income from trading fees has also slowed to a trickle. Tighter daily trading bands on the nation’s stock exchanges has slowed trading volumes, but membership fees that securities companies pay to both the HCM City and Ha Noi exchanges have remained as high as before.

Meanwhile, fixed operating costs of these securities firms, including rents and wages, continue to rise. Some analysts expect a wave of mergers among securities firms over the next year as many struggle to survive. (VNS)

Foreseeable losses for banks’ financial investments

Monday, May 5, 2008
A lot of securities companies and commercial banks have reported losses on their securities investments as the stock market has been falling since the end of 2007.

The Refrigeration Engineering Enterprise (REE), which reaped several hundred billions VND from securities investments in 2005, 2006 and the first three months of 2007, has reported the loss of VND100bil for the first quarter of 2008. The La Nga Sugar Plant, which injected VND17.7bil in 10 share items, has also reported heavy losses.

All securities investments bringing losses

In 2007, Eximbank sold VND500bil worth of stakes to 17 strategic partners at a price 8 times higher than the face value (VND4tril or $250mil). However, as Eximbank’s share price has dropped to VND36,000/share (- 50%), the said 17 partners have suffered the loss of VND2,200bil ($137.5mil).

A lot of securities companies have reported losses on securities trading deals. Six securities companies are offering themselves for sale after a period of suffering losses. Sources say that the director of a state owned bank’s securities company borrowed money from the company to make private trading deals, and since the deals failed, the director has had to leave his post.

Financial reports show that all joint stock banks have investments in securities, and it is certain that the financial reports will show big losses for the investments due to the falling stock market.

ACB seems to be the leading securities investor. Its audited financial report shows that by December 31, 2007, the bank’s total investment value in stocks had reached VND9,636bil ($602.25mil), equal to 23.2% of the total outstanding loans and investment value of the bank (VND41,446bil or $2,590.37mil).

South East Asia Bank had the total investments in securities of VND3,968bil ($248mil) by December 31, 2007, while VIB bank VND6,676bil ($417.25mil), Military Bank VND2,169bil ($135.56mil), and Techcombank VND6,842bil ($427.62mil).

Being a joint stock bank with a modest scale of operation, An Binh Bank, which has shifted to operate as an urban bank from a rural bank, also had investments in securities of up to VND3,569bil ($223.06mil), equal to 52.55% of its total outstanding loans (VND6,800bil or $425mil).

Lessons for business strategy should be drawn

Stock prices have decreased by 50% compared to the end of 2007, and it remains unclear when the market will recover. Therefore, it is foreseeable that joint stock banks will incur losses for securities investments in 2008.

In principle, enterprises in general and commercial banks in particular should only make investments in securities with a certain proportion, while they should focus on their main business fields. However, the high profit gained in the early 2007 made them forget the principle.

They may also well understand that in all investment cases, they have to make provisions in anticipation of price decreases. However, some banks seemed to ignore this principle as well. (VNE)

Brokerages seek new market share in nation’s hinterlands

Sunday, May 4, 2008
Several securities firms have continued to expand their brokerage offices into provincial rural and urban areas to attract new investor activity despite the stock market downturn.
These securities groups are going on the offensive to grab their share of the growing nationwide demand for access to traded stocks in anticipation of a coming market recovery.
The boom in the number of new brokerage offices has been facilitated at the same time by new, easier administrative procedures for securities companies to establish localised branches.

Securities firms can now open local offices without first having to obtain permission from the State Securities Commission (SSC), and are simply required to report a new branch once it has already opened.

Brokerage houses have cut costs by co-ordinating with local enterprises. While the securities company focuses on personnel and equipment, the local enterprise provides the real estate in which the partnership is housed.

Expansion into the provinces has also been motivated by the mushrooming number of agencies in the trading hubs of Ha Noi, HCM City and Hai Phong City. As these markets approach the point of saturation, firms have begun to look outward in the search for greater transactional capacity.

For example, An Binh Securities Company (ABS) co-operated with Tat Thanh Co Ltd to set up an agency in Thai Nguyen City on April 24. This was the 16th local branch of ABS to open nationwide.

"The opening of this new ABS branch will satisfy the demand of this industrial city’s stock market investors," said an ABS representative.

On the same day, Capital Securities Co (CSC) opened an agency in northern Ha Nam Province. This is the first provincial branch of CSC, and also the first securities firm to open a local office in Ha Nam.

APEC Securities Co (APECS) opened an office in the northern Thai Nguyen Province on April 23 in co-ordination with Tan Cuong Hoang Binh Joint stock Co.

APECS recently opened branches in the four provinces of Long An, Dak Lak, Nam Dinh and Nha Trang City, as well as an office in Ha Noi.

On April 12, VNDirect Securities Co launched a local trading office at Vinh Yen Township in northern Vinh Phuc Province.

Nguyen Manh Hao, director general of APECS, said that since the firm’s inception it had pursued the development of a nationwide network of offices.

Hao expressed reservations about the promise of remote market connectivity, however, saying, "Although the application of modern technologies has made it possible to trade securities via telephone or online, someone still has to be there on the trading floors to make a deposit or withdrawal on an account, or register an account in the first place, so the on-site agency will always be necessary."

To operate such an agency, said Hao, it costs APECS, and other firms like it, tens of millions dong a month. This sum is not small, especially given the current difficult situation with the market as well as the fierce competition between securities firms.

Taking on the added cost of developing a nationwide brokerage network, therefore, is a long-term strategy on the part of APECS with a view towards staking out a dominant position in the market in advance of its rebound in the future, Hao added.

Viet Nam’s stock market is still in its infancy and it has great potential to develop under long-term vision. While the number of private individuals investing in securities throughout the country so far remains modest, analysts predict that the figure will continue rising steadily.

Hoang Van Hiep, a farmer in the central highland province of Lam Dong said: "While real estate prices are high and unstable, investment in securities becomes more attractive."

Another farmer in Lam Dong Province said: "Securities investment is a new and unfamiliar channel of financial activity for me, but definitely one that I intend to look into further and in which I hope to one day participate." (VNS)

SSC To Halt Licensing New Securities, Fund Management Cos

Monday, April 28, 2008
The State Securities Commission (SSC) said Monday that it has decided to temporarily halt issuing licenses to new securities and fund management companies as part of efforts to boost the industry's performance.
"In order to support the stable development of the stock market, the State Securities Commission will temporarily halt the reception of applications for setting up new securities and fund management companies," the SSC said on its Web site.
The SSC's move follows the government's asking last week of all state-owned companies to review their operations; these entities have invested VND23.34 trillion ($1.45 billion) in securities and fund management companies in recent months, according to analysts.
"The SSC's decision is a right move because it will help existing companies to improve operations in terms of service quality, rather than by simply slashing service fees," said Phan Hong Quan, a director of Hanoi-based EuroCapital Securities.
"Viet Nam's stock market is relatively small, and licensing too many securities companies has caused unfair competition," Quan told Dow Jones Newswires.
"Many local brokerage firms, including EuroCapital Securities, are seeking foreign investors for their expertise and to help boost operations," Quan said.
There are currently 87 securities companies and 30 fund management firms licensed by the SSC, but not all of them have started operations.
Quan forecast that about half of the existing securities companies will soon close their offices because of losses, following a 44% plunge in domestic stocks so far this year. The benchmark domestic share index has fallen more than 55% since its peak in March 2007. (Dow Jones)

Thanh Cong Textile maker sets sights on real estate, securities business

Monday, April 28, 2008
The Thanh Cong Textile Garment-Investment-Trading Joint Stock Company (TCM) which is listed on the HCM City Stock Exchange plans to expand its business into real estate and securities brokerage.

Chairman Dinh Cong Hung announced at last week’s shareholder meeting that construction of the Thanh Cong Tower apartment complex would begin on a 10,000sq.m. plot in Ho Chi Minh City ’s Tan Phu district before June.

Also in Tan Phu district, the construction of the 6.4ha Thanh Cong Tower 2 is set to begin next year. It will include houses, a vocational training school, a conference centre, office buildings and a cultural centre.

Other residential projects are in the works, including Thanh Cong Tower 3 in district 4, Bui Huu Nghia apartment building in district 5 and a 20ha service and commercial area in the northern Bac Ninh province.

Based in HCM City , TCM is cooperating with several partners on a 200ha industrial park and a 3ha residential area in neighbouring Long An province, a 17ha bonded warehouse at Phu My Port in Ba Ria – Vung Tau province and a 10ha resort in the coastal province of Phan Thiet .

The Thanh Cong General Clinic, on Thanh Cong Tower 2’s grounds, will begin operation later this quarter It is capable of receiving 1,000 patients a day.

In May, Thanh Cong Securities company will become a trading member of the HCM City Stock Exchange.

The company intends to issue 10 million convertible bonds with a face value of 100,000 VND each to raise funds for its real estate projects this year alone. (VNA)

Bao Viet Securities broker to hike chartered capital

Saturday, April 26, 2008
Bao Viet Securities Company (BVS) recently approved this year's business plan with the total revenue of 314 billion dong, 142.3 billion dong from after tax profit and pay dividend of 20%.

The company also plans to hike its chartered capital to one trillion dong from the current of 450 billion dong via offering more shares within this year or by the end of next year and sell about 10% stake to foreign shareholders after capital increase.

During the first quarter of this year, BVS made a revenue of 59.17 billion dong and 27.8 billion dong from pre tax profit. The broker added 30 million more shares to securities depository centre from April 23. These are shares being offered to the existing shareholders under the model of buying right at the ratio of two new shares for one share held and the offering price of 323,000 dong per share.

Last year, the company gained 399.9 billion dong in total revenue and 214.5 billion dong from after tax profit and planed to pay dividend of 20%.