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Securities Outlook

Securities firms see dimmer outlook for this year

The brokerage industry believes business will not be as bright as last year because of protracted political uncertainty and the economic slowdown.

The year 2014 will also "be very different from last year because foreign economies will be more stable and the US Fed Reserve's tapering of quantitative easing will only have a minimal impact on the global market because investors factored it in four to five months ago", Pattera Dilokrungthirapop, director of the Association of Securities Companies, said yesterday.

Asco predicts stiffer competition this year with the addition of four brokerages.

They also revealed a plan to lower investment in preparation for the restructuring of the stock-exchange system.

Pattera, who is also chief executive of DBS Vickers Securities, said the global economy was reviving but the problem was that the internal situation had no clear end in sight.

The local economy is slowing down because the political turmoil creates uncertainty in government policies and erodes investment sentiment.

Securities companies will also be challenged by the change in investor behaviour to look for high returns during the market's fluctuations.

Brokerages will have to work double time to come up with an investment strategy and find profitable stocks to retain customers because of the entries of three players last year - AEC Securities, Asia Wealth Securities and Apple Wealth Securities - and Land and Houses Bank this year.

The business is different now because of the use of new equipment and technology in investment and this has pushed up costs.

"Whoever wants to set up a securities house needs a lot capital nowadays. Besides regular payments, brokerages will also need extra funds for giving out loans and [other activities]. buying securities margins. In total they would need about Bt1 billion for investment," she said.

For 2014, Asco will help regulate the cost of investment and encourage middlemen in the system, or "market makers", to promote transactions within the system itself.

It is prepared to be the middleman in terms of cost sharing in order to build up a central store of information that all brokers can use. That would save costs.

The association will develop facilities to reduce operating costs such as a back office costs. It will start to run a clearing system in the second half, Pattera said.

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