Kim Long’s exit to lead to market reshuffle

Does the market’s tumble threaten Kim Eng Vietnam?

Le Minh Tam

Our parent company Kim Eng Holdings has survived economic crises throughout nearly 40 years of operations and we know how to survive such hard situations.

When the competitive environment becomes severe, the weak ones will be eliminated, giving bigger chunk of market shares to the survivors. Therefore, it's actually an opportunity for us now.

Kim Eng Vietnam is rapidly expanding its network and recruiting more employees. We are launching branches in Can Tho and Vung Tau this May, along with opening new ones in Ho Chi Minh City, Hanoi and Long Xuyen this year.

What do you think about the 105 securities companies operating in Vietnam?

That is too many for Vietnam’s securities market given the market capitalisation of around $36 billion with simple products - just bonds and equities - and rigid trade mechanism. Actually, just 20 top securities companies are popular among investors. Half the market is held by 10 leading firms and the rest shared by more than 90 others. Several securities companies are running with too small capital, insufficient to invest in infrastructure and especially in human resources.

Will the mergers and acquisitions trend among securities companies be stronger after Kim Long Securities’ exit?

Yes, it becomes stronger. In fact, Vietnam's securities market in 2010 was under heavy pressure due to unfavourable macroeconomics and the situation has not eased. Given this context, the local securities market will have to restructure with the elimination of weak players. Notably, foreigners will aggressively seek to acquire domestic securities companies as under Vietnam’s World Trade Organization commitments, they are allowed to wholly own securities companies from 2012.

However, foreigners will not be interested in small companies. Instead, they will seek medium-size ones with a certain network, local client base and acceptable professional background. They will be particularly interested in ones which own strong relationships with state conglomerates that have not gone public. The case of Japan’s Nikko Cordial Securities Inc. becoming strategic partner of PetroVietnam Securities recently is a typical example.

Does Kim Eng intend to acquire or merge with others to raise its competitiveness?

We are satisfied with our development pace and thus, see no need to acquire or merge with any company now.

Maybank recently decided to buy a stake in Kim Eng Holdings. How will this purchase affect Kim Eng Vietnam?

Maybank is a big financial group with a huge financial capabilities, a large clients base and an international network in some countries which Kim Eng Holdings has no presence. As an affiliate of Kim Eng Holdings, Kim Eng Vietnam will be supported in funding, human resources and distribution network.

What do you think about the securities market’s outlook in 2011?

In 2011, Vietnam’s government will stabilise the economy by reforming the economy's structure, including the commercial banking system, monetary policies, state-owned enterprises operations and public investment. In the long term, we have an optimistic view about Vietnam’s macroeconomic situation. However, in the short term and especially in 2011, we still have to wait for the economy’s response to the government’s measures.

In your opinion, what should the State Securities Commission (SSC) do to assist market participants?

I think the SSC should encourage foreign securities companies to join the local market. The trend will advance the local market by creating better operating foundations for the domestic securities market.

Importantly, the SSC and the Ministry of Finance should keep their promises to soon launch new trading instruments and opening trading accounts simultaneously, which will absolutely increase market liquidity. Investors have looked forward to those instruments for a long time and the delays are hurting their confidence and that of the market’s.