Stocks aren’t wanted, IPOs have failed, hedge fund values have plummeted, so what is the next logical step for securities firms? The answer to that question, at least for some, may be found in commodities.

FPT Securities Company and the Vietnam Gold Exchange (VGB) recently cooperated to open a gold trading agency in Hanoi to receive trading orders from VGB gold traders. FPT Securities official Nguyen Van Dung said the establishment of the agency was part of the company’s plan to diversify investment channels.

“Securities and gold are two attractive investment channels. When one of them is in decline, our clients can easily shift to the other,” Dung said.
An Binh Securities Joint Stock Company, Nam Viet Securities and Asia Gold Company are also jointly opening a gold trading agency in Hanoi.

Dong Duong Securities, Gia Quyen Securities and Ho Chi Minh Securities Corporation are also now VGB gold trading agencies, while Thanh Long Securities is also looking to set up its own exchange. Nguyen Cong Danh, general director of Asia Gold Company - which manages Asia Gold Exchange, said: “The shift to gold trading is also a good chance for securities firms to survive the slumping stock market.”

“Being a gold trading agency is very popular now for securities firms. We and Vietnam International Gold will open a trading agency soon,” said Phan Quoc Huynh, director of VietinBank Securities. According to unofficial statistics, 30 securities firms are working as trading agencies of 10 gold exchanges in Vietnam. Gold can be traded on exchanges using spots, forwards, futures and options.

Gold traders can also use the short-selling options, which are not for equities trading, so gold trading liquidity is high. Traders can deposit only 7 per cent of the total trading amount while the remainder 93 per cent can be borrowed. “Traders can earn huge profits if they correctly forecast the trend, up or down, of global gold prices,” said a director at VGB.

Dinh Nho Bang, Vietnam Gold Business Association’s general secretary, said that gold trading was risky in Vietnam as there were no gold exchange regulation. Opening a gold trading agency is just a temporary solution for securities firms amid slumping equities markets,” Bang said.

Source: Vietnamnet