HA NOI (VNS)— The stock market is no longer a chicken that lays golden eggs for securities tycoons in Viet Nam, with many incurring heavy losses and others being forced out of the market or even prosecuted for securities fraud.
On Wednesday, shareholders of Au Viet Securities Company (AVS) agreed to dissolve the business after six years of operations, selling assets and canceling all of its listing on the Ha Noi Stock Exchange.
The company's equity by the end of last year totalled VND216 billion (US$10.3 million) while their income still reached VND161 billion ($7.7 million), enough to pay shareholders VND4,500 on each share of holdings, a sum nearly equivalent to the share price on the stock market.
According to the chairman of the company Doan Duc Vinh, he and other executives struggled long and hard with the decision to close the business.
He said they used their experiences in the securities and financial markets to analyse the macro economic situation and review the investment strategy of the company, and this had shown that cutting their losses was the only viable option.
AVS are far from the only company to be suffering on the stock market. Many others have also struggled and been forced to reduce their activities (either by removing brokerage services or terminating their membership on the two stock exchanges). These include CLS, Sao Viet, Lien Viet, An Phat and Dong Duong.
However, while some can make a soft landing, others must accept heavy losses which bring them to the verge of bankruptcy or even prosecution.
Sacombank Securities (SBS), a financial arm of Sacombank, fell from a position of dominance on the market two years ago with a capital size of VND1 trillion ($47.6 million) and is now heavily indebted, with a negative equity capital of VND250 billion ($11.9 million).
Although the company showed determination to restructure, it is still facing the risk of a mandatory delisting. To make the situation even worse, all of the firm's leaders withdrew from their positions at the same time on Thursday, creating chaos at the top.
SBS shares are now trading for less than VND1,000 ($0.05) on the bourse.
SME Securities (SME) is in a similar situation. Some years ago it was a big company with large capital and advanced technology. However it was forced to delist shares in October 2012 due to prolonged losses. Its leader was later prosecuted for fraud involving asset appropriation.
According to market insiders, there are too many securities companies operating in the relatively small market of Viet Nam (the number stands at over 100) and it is inevitable that only the strongest ones can survive, especially during the market's restructuring process. — VNS