The State Securities Commission (SSC) revoked the operation licenses from the Truong Son and Hanoi Securities Companies in early July. The two have not taken any actions to improve their bad situation, with the accumulative loss having reached 50 percent of the chartered capital.
These are the first two companies out of the 105 operational ones which have been eliminated after 13 years of the Vietnamese stock market operation.
In fact, the deaths of the two securities companies are foreseeable, while the death declaration is just the formal procedure. Both of them stopped operation a long time ago, with no head office, no operation and no contact address.
Especially, the two companies not only have been hiding themselves from investors, they have also severed relations with the watchdog agencies, have not released finance reports and fulfilled the duty on information exposition for the last several years.
Delta Securities Company may be the next one to be dealt with by SSC. Unlike the two above said companies, Delta occasionally releases information about its operation. However, its situation is also very bad with the minus VND2 billion in stockholder equity by the end of the third quarter of 2012 and the minus 18 percent of the capital adequacy ratio by the end of the second quarter.
Analysts believe that Delta should have seen its license revoked at the same time with Truong Son and Hanoi. However, this still has not occurred just because of the complaints lodged by customers.
In mid-April 2013, SSC made the decision to suspend the operation of the Trang An Securities Company for six months because the company could not meet the requirements for operation safety.
A series of other companies have been put at the point of death. They have been either put under the special control of the watchdog agency, or warned about the big losses, debts and the law violations.
About 10 securities companies have been put into the black list – the list of the companies put under the special control of the watchdog agency, namely GBS, SBS, Mekong and SME.
Some others, which understood that they would not be able to struggle to survive, decided to quit the market themselves. These included the Cho Lon Securities Company which dissolved in April 2013. The shareholders of the Au Viet Securities Company have also approved the dissolution.
The Vietnamese stock market has a relatively big capitalization value, about $40 billion by the end of the second quarter of 2013. However, the daily trading volume is very low, worth hundreds of billions of dong, or tens of millions of dollars only.
Therefore, experts believe that 105 securities companies is too much for a market like Vietnam. The top 10 companies alone now hold 70 percent of the market share, which means that the remaining market share is too small for the other 95 companies.
A lot of securities companies reportedly have vanished, though their dissolution has not been declared officially. Experts have warned that it would be not easy to dissolve the companies because of the complicated procedures relating to the benefits of customers, commercial banks, shareholders (economic groups, enterprises, investment funds, and credit institutions).