Brokers compete with foreign rivals

HA NOI — Domestic brokerages are still capable of operating and continue to have their own advantages, despite a new decree that allows foreign investors to wholly own securities companies in Viet Nam.

Before Decree 58/2012/ND-CP guided the implementation of some articles of the Amended Securities Law, foreign owners were not able to exert major influence on securities firms, said FPT Securities Co analyst Giang Trung Kien.

However, we had to open the market so that it would be able to develop, he added.

"The Vietnamese stock market remains very weak compared to the international market," he said.

Meanwhile, the top 10 securities firms saw technological developments comparable to those experiencd by foreign companies.

In addition, Vietnamese brokerages have the advantage of understanding domestic enterprises, he said.

"Investors are familiar with domestic securities companies, and the level of competition among these firms is also high," he noted.

Therefore, it would take time for foreign brokerages to achieve outstanding quality. "This, in turn, will make the market develop better."

Meanwhile, domestic firms should not seek profits based on trading amongst themselves. "Brokerages have often paid a price for trying to acquire growth and market share at all costs," he said.

Securities companies have two core businesses: brokerage and consulting services, which attracts investors.

Over 35 brokerages have reported their capital adequacy ratio so far. Only Hong Bang Securities Co received a warning as its ratio reached only 130 per cent.

Meanwhile, data as of Thursday showed that only seven brokerages suffered losses. Kim Long Securities Co (KLS), despite posting a loss worth VND11.5 billion in the second quarter of this year, saw the highest adequacy ratio of nearly 1,300 per cent. — VNS