Brokerages cut jobs, pay as losses mount, trade slumps
06-OCT-2008 Intellasia | Bloomberg
Oct 6, 2008 - 7:00:00 AM
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Vietnam has "too many'' brokerages, forcing them to cut jobs and salaries after the market plunged because of government measures to tackle rampant inflation, the Vietnam Association of Securities Businesses said.
As many as 80% of the nation's 98 brokerages have been forced to slash costs and "narrow their business operating areas,'' Nguyen Thanh Ky, general secretary of the association, said in Hanoi today at a conference to discuss measures to overcome the effects of inflation.
"The number of brokerages in Vietnam has reached 98 and shows no sign of stopping,'' Ky said.
The HCM City Stock Exchange's benchmark VN Index, the second-worst performer in Asia, has slumped 51% this year, pushing brokerages into losses. The central bank of the Southeast Asian nation raised interest rates three times this year to the highest in Asia and restricted credit growth at 30% to curb the fastest inflation in at least 16 years.
Saigon Securities Inc., Vietnam's biggest publicly traded brokerage, lost 27 billion dong (US$1.6 million) in the first six months of 2008, Chief Executive Officer Nguyen Duy Hung said July 31. Bao Viet Securities Joint-Stock Co., Vietnam's third-biggest publicly traded brokerage by number of customers, lost 321 billion dong, CEO Nguyen Quang Vinh said in July.
Only about 300 of the 1,000 public companies registered with the State Securities Commission are listed on the nation's two stock exchanges in Hanoi and HCM City, Ky said.
'Not keeping pace'
"The position of the stock market has been affirmed, however, state management isn't keeping pace with the development of the market,'' Ky said.
Unlisted public companies are subject to less regulation, with their shares traded over-the-counter.
"Therefore, the free market is too large'' and "that is the reason why the stock market lacks transparency and stability,'' Ky said. The government needs to "quickly and strongly develop'' the two bourses and "narrow the scale of the free market,'' he said.
The value of stocks on the Hanoi and Ho Chi Minh exchanges has dropped to 25.7% of Vietnam's gross domestic product, Ky said. It made up 34.8% of GDP in 2007, the HCM City Stock Exchange said in its annual report last year.
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