The Association of Stockbroking Companies in Malaysia (ASCM) is looking at ways to help reduce its members’ burden during this difficult time.
Broking firms are now struggling to pay their monthly fixed costs like operating costs, rentals, wages, salaries and utilities bills.
Chairman Datuk Saiful Bahri Zainuddin said the association was preparing a proposal to the Government and regulators, requesting for waivers for some operating costs for at least a year or two.
“We are only asking for waivers and not requesting the Government to permanently withdraw these costs.
“Every little sen counts now. The waivers would certainly help us lower our monthly operating costs, so that brokerages can sustain their business and ride out the storm,” he said.
Since some other industries have received incentives and waivers, Saiful felt that the Government should also consider giving waivers to stockbroking firms to cushion the impact of the current downturn.
Stand-alone stockbroking firms, Saiful said, must look at some cost-cutting measures to improve their bottom lines; otherwise, these firms, especially the smaller ones, might face problems later.
He said stand-alone firms’ scope of activities was limited to brokerage services, making it difficult for them to compete with bigger firms and foreign brokerages.
“I personally don’t know how long they can last. I think eventually they would have to merge with other stockbroking firms to survive.
“However, in this market condition, it is not easy to find a suitor for merger,” Saiful said.
In the last six months or so, there has been no report of retrenchments or staff layoffs in the local stockbroking industry.
“The reason is partly because during the last crisis, most stockbroking firms had taken lots of measures to cushion the impact. So they are more resilient today compared to the 1997 financial crisis,” Saiful said.
Meanwhile, the Securities Commission has also taken the necessary action and put in a lot of measures to strengthen the stockbroking companies’ operations.
“But due to the slowdown in business, I believe brokerages now are looking into many ways to cut their monthly operating costs and overhead expenses like rentals. They are freezing employment and overtime, maybe making salary cuts and taking other measures,” he said.
“I am also looking into some measures to ensure that our business volume commensurates with the overheads we have,” he said.
“Looking at the current situation, we have not seen the end of the crisis yet. This downturn might prolong till next year like what some economists have predicted,” Saiful said.
The recovery depends on a turnaround in the United States. “If the US manages to stabilise early, we’d probably see a faster turnaround. But for now, we have not even seen the US situation stabilising.
“Fundamental performance is still weak now. The economy maybe would recover only in the second half of next year or by end of next year,” he said, adding that recently, most local companies reported financial results that were below expectations.
Saiful feels that the authorities should not regulate the market too tightly so that it could attract more investors to come into the stock market.
The regulators should also offer more incentives for investors, thus generating more volume in the market, he said. – The Star
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