Ho Chi Minh City, with the guarantee method being a firm commitment. The implementation of guarantee for issuance of shares is still limited, in the past year only a few securities companies have implemented the contract of guarantee for issuance of shares, such as BVSC implementing the guarantee for Kinh Do Corporation in the North and the South. Asia Commercial Bank Securities Company guaranteed the issuance for 9 joint stock companies with the guarantee value not exceeding 8 billion/company. The remaining securities companies mainly act as issuing agents.
The securities company that most actively implemented the issuance agent activity for equitized enterprises in 2005 was BSC with a total of 11 contracts, accounting for 80% of the total number of issuance agent contracts of securities companies, followed by IBS with 4 contracts signed in the year. The total value of securities issuance guarantees in 2005 of securities companies reached 21,548 billion VND, an increase of 155.7% compared to 2004. At the same time, revenue from this activity also reached 42.2 billion VND, an increase of 129% compared to the previous year. However, the issuance guarantee activity in 2005 was only concentrated in a number of securities companies in the state-owned banking sector and there were a number of companies that accounted for the proceeds from issuance agent services in issuance guarantee revenue such as TSC, SSI. The securities company with the highest underwriting value in 2005 was ARSC with VND 12,010 billion, followed by VCBS with VND 4,434 billion.
In 2006, BVSC accounted for more than 70% of the market in terms of the total number of stock issuances and the value of acting as an agent and underwriter for units issuing shares to the public. The underwriting business was newly added by SSI in May 2006, but the company has already underwritten for 3 listed companies including Sacom, Bibica, and more recently SSI collaborated with AZN to successfully underwrite 900 billion VND of bonds for EVN, ending 2006 by completing a contract to underwrite 1,000 billion VND of shares for Vinashin.
Underwriting and issuance agency revenue of some securities companies such as AGRISECO is 3,290 billion VND, accounting for about 8.25% of revenue, BVSC is about 13 billion, accounting for 19.72% of total revenue, SSI is 8.91 billion, accounting for 2.67% of total revenue.
6. Performance results of securities companies in recent times .
In 2005, the total revenue from securities trading activities and investment profits of securities companies reached 680.3 billion VND, of which revenue from trading activities reached 298.7 billion VND (accounting for 44%) and investment profits reached 382 billion VND (accounting for 56%). Investment profits with large values were mainly concentrated in a number of companies such as ARSC reaching 218.7 billion VND, VCBS reaching 74.3 billion VND, IBS reaching 36.1 billion VND and ACBS reaching 31 billion VND. Most securities companies achieved quite good profits with total profits reaching 167 billion VND, an increase of 38.8% compared to the total profits of the companies in 2004, except for Mekong Company which continued to suffer a loss of 2.8 billion VND. The company with the highest profit was VCBS (40.3 billion VND), the lowest was Haseco (1.2 billion VND).
The following is a table of revenue and profit after tax statistics of 15 securities companies in Vietnam. The remaining securities companies were newly established in 2006 so there are no complete statistics on revenue and profit.
Table 11
STT
Company name | Revenue | Profit after tax | |
1 | Bao Viet Securities Joint Stock Company | 92,236,522,896 | 50,893,882,212 |
2 | Vietnam Investment and Development Bank Securities Company Limited | 200,540,000,000 | 51,180,000,000 |
3 | Saigon Securities Joint Stock Company | 378,508,612,998 | 242,030,533,143 |
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4
Asia Commercial Bank Securities Company Limited | 112,950,984,891 | 84,115,562,711 | |
5 | Ho Chi Minh City Securities Corporation | 114,712,545,802 | 90.970.287.752 |
6 | Saigon Thuong Tin Commercial Bank Securities Company Limited | 10,501,571,114 | 4,861,728,510 |
7 | Vietnam Joint Stock Commercial Bank for Industry and Trade Securities Company Limited | 102,874,385,536 | 25,723,295,985 |
8 | Vietnam Bank for Agriculture and Rural Development Securities Company Limited | 594,240,000,000 | 41,000,000,000 |
9 | Vietcombank Securities Company Limited | 234,330,452,000 | 108,850,736,000 |
10 | Mekong Securities Joint Stock Company | 20,346,421,000 | 5,857,844,000 |
11 | Kim Long Securities Joint Stock Company | 6,354,729,646 | 4,458,842,118 |
12 | Dong A Bank Securities Company Limited | 42,566,606,282 | 21,838,448,748 |
13 | Hai Phong Securities Joint Stock Company | 28,760,886,777 | 20,380,680,117 |
14 | An Binh Securities Joint Stock Company | 4,144,264,614 | (250,957,803) |
15
Dai Viet Securities Joint Stock Company | 4,055,485,673 | 1,069,672,673 |
(Source: Financial reports of securities companies)
In 2006, securities companies, especially those that have established a position in the stock market and have a large market share, all achieved super profits. Leading the way was SSI with over VND242 billion, 1.4 times the total revenue of 14 securities companies in 2005. Next was VCBS with VND108.85 billion, 2.5 times higher than in 2005 (VND40.3 billion), HSC with VND90.9 billion, ACBS with VND84.11 billion, BSC and BVSC both achieved over VND50 billion. Hai Phong Securities Company had a profit of over VND20 billion while its revenue was over VND28 billion. These impressive figures show that in 2006, securities companies achieved super profits that few service industries can bring about. This is also the reason for the massive emergence of securities companies in 2006.
However, besides companies that have been operating for a long time and achieved super profits, newly established companies face many difficulties due to lack of customers and high costs to maintain the company. The director of a securities company revealed that according to the monthly brokerage statistics table from members of the Ho Chi Minh City Stock Exchange (HOSE), only about 20 out of more than 50 member companies are profitable or break even. The rest are losing from light to heavy, some units even only earn
200,000 VND per day transaction fee.
Securities companies have helped the Government carry out the process of equitization of enterprises, helping enterprises attract a large amount of capital from investors, and at the same time bring significant revenue to the State Budget through the payment of fees, charges and taxes because most of the securities companies have been profitable in the past. As of December 31, 2006, there were 193 companies listed at the Hanoi and Ho Chi Minh City Stock Exchanges. The total capital value reached
221,156 billion VND (equivalent to 14 billion USD), equal to 22.7% of GDP in 2006, 20 times higher than at the end of 2005.
III. The role of securities companies in the development of Vietnam's stock market.
1. Securities companies have contributed greatly to the development of the Vietnamese stock market over the past 7 years.
According to the Securities Investment Newspaper (July 2007), as of July 27, 2007, the State Securities Commission had licensed 59 securities companies to operate, present in most major provinces and cities, with representatives receiving orders in many other provinces and cities with about 243,809 accounts (as of the end of June 2007).
To see the role of securities companies in the Vietnamese stock market, we can evaluate the overall development of the Vietnamese stock market in recent times. After 6 years of operation and development, the stock market has achieved impressive achievements, affirming the successful transition to a market economy in Vietnam. At the beginning, when the Ho Chi Minh City Stock Exchange officially came into operation on July 28, 2000, there were only 2 stocks listed for trading with a total listed capital value of 270 billion VND and 6 securities companies registered as members. By the end of 2005, the total market value of listed securities and registered for trading at par value reached 47,478 billion VND, equivalent to 6.1% of GDP, of which stocks accounted for 1.2% of GDP and bonds accounted for 4.9% of GDP. The number of licensed member securities companies was 15 companies.
In 2006, the stock market had remarkable growth in terms of quantity of goods, transaction value and participation of investors. As of December 31, 2006, there were 193 companies listed at the Hanoi and Ho Chi Minh City Stock Exchanges. The total capital value reached VND 221,156 billion (equivalent to USD 14 billion), equivalent to 22.7% of GDP in 2006, an increase of nearly 20 times compared to the end of 2005 and far exceeding the target of 15% of GDP by 2010 of the stock market development strategy. VN-Index increased
strong, reaching 751.77 points in the last trading session of 2006, up 144% compared to 307.5 points in the last trading session of 2005 while the growth rate in 2005 was only 28%. The bond market also had a similar development. By the end of 2006, there were 458 types of bonds traded, including government bonds, municipal bonds and commercial bank bonds with a total value of 70,000 billion VND, accounting for 7.7% of GDP.
Entering the beginning of 2007, the stock market continued to grow strongly, especially transactions of foreign investors. The VN-Index and HASTC both grew strongly. The VN-Index quickly surpassed the 1,000-point mark, recording a record of 1,170.67 points on March 12, 2007. Closing the last trading session of March 2007, the VN-Index reached 1,071.33 points, up 44.53% compared to the opening session of 2007. At the end of the first quarter of 2007, the HASTC reached 404.08 points, up 67.03% compared to the first trading session of 2007. During the quarter, the HASTC also reached a record of 454.81 points on March 3, 2007. In addition to investing through stock exchanges, many domestic and foreign investors are also actively participating in buying shares and stocks of Vietnamese enterprises that are not listed on stock exchanges. This shows that the scale and scope of the stock market is developing deeper and wider.
The current growth of the Vietnamese stock market is partly due to the State's correct development policy, and partly due to the contributions of relevant organizations, including securities companies as market makers. Securities companies have continuously improved and diversified their services to better serve stock investors and at the same time, played their role well to help the stock market operate more effectively.
2. Securities companies have been helping the State implement the sale of State-owned enterprise shares through auction mechanisms on the stock market.
contracts , contributing to greater revenue for businesses and the State.
Up to now, the stock exchange centers have organized 250 auctions, selling more than 1,053 million shares, collecting more than 34,509 billion VND .
Securities companies have helped the State successfully carry out the equitization of state-owned enterprises and private enterprises, helping enterprises attract the necessary capital for production and expansion. Securities companies also help the State issue government bonds, corporate bonds and fund certificates, helping the equitization process of enterprises to be accelerated, stronger and more active. Especially starting from 2007, according to the Government's policy, Vietnam will focus on equitizing a series of large corporations and economic groups. During this period, the important task of securities companies is to help the State effectively implement the equitization plan in the coming time.
In addition, thanks to good business activities and high profits, securities companies also contribute to the state budget through taxes, fees, and charges. With the continuous increase of securities companies and the fact that the Vietnamese stock market is attracting the attention of domestic and foreign investors, the business activities of securities companies today have, are and will contribute to the economy and the Vietnamese stock market.
CHAPTER III: SOME SOLUTIONS TO DEVELOP SECURITIES COMPANIES.
I. Challenges that securities companies still face:
Because the stock market is still young and new in Vietnam, Vietnamese securities companies have encountered many difficulties in the process of establishment and operation. The following factors can be mentioned:
1. Securities companies lack specialized human resources.
- Because in Vietnam, the stock market is still very new, the brokerage, consulting and securities-related professions are not really popular and have not been properly trained: Most employees of securities companies are only trained in securities through crash courses or are trained after recruitment. High-quality human resources are also very lacking. That is why securities companies do not have quality consulting services and have not really created trust in investors. Currently, there is no specialized training program for leaders as well as employees practicing securities business, which is still lacking and not up to international standards.
- In 2006, due to the massive emergence of securities companies, the shortage of employees became more and more serious. Securities companies competed to introduce policies to attract and retain talented people, and personnel changes occurred continuously.
It can be said that qualified human resources are a decisive factor for the success of securities companies, while in Vietnam, human resources that meet market requirements are still lacking in quantity and weak in quality, so this is a problem for securities companies in Vietnam at present and in the future.