Z.com Securities Sparks Investor Panic with Margin Account Termination
Securities firm instructs customers to close their accounts by December 20, sending ripples of concern through the Thai financial market
Investors on the Stock Exchange of Thailand are facing significant uncertainty following an unexpected announcement by GMO-Zcom Securities (Thailand) Public Company Limited to terminate all margin account services by 20 December 2024.
The securities firm has instructed its customers to close their margin accounts by the specified date, sending ripples of concern through the Thai financial market. Industry sources warn that the mass closure could trigger a substantial sell-off, potentially causing significant volatility in stock prices.
Z.com, a subsidiary of Japanese IT conglomerate GMO Internet Group, has been experiencing mounting financial challenges. Despite increasing revenue from 1,040.07 million baht in 2022 to 1,115.56 million baht in 2023, the company has incurred substantial losses, exceeding 1,000 million baht over two consecutive years.
The first half of 2024 further underscored these difficulties. By 30 June, the company's total revenue had dropped to 527.64 million baht, a significant decline from 647.68 million baht in the same period last year. The company reported a staggering loss of 1,006.93 million baht.
Mounting Pressure and Investor Frustration
Customers have reportedly attempted to negotiate with Z.com over 10 times, proposing various solutions including instalment payments and additional collateral. However, the company has consistently rejected these proposals without providing alternative resolutions.
The scale of the potential market impact has prompted calls for immediate intervention. With a loan limit exceeding 10 billion baht and contracts involving over 100 securities, the Ministry of Finance, Securities and Exchange Commission (SEC), and Stock Exchange of Thailand (SET) have been urged to investigate and address the situation urgently.
GMO Internet Group, founded in 1991 by Masatoshi Kumakai, has experienced significant growth, particularly during the COVID-19 pandemic. The company boasts nine listings on the Japanese Stock Exchange and 106 global subsidiaries. However, its overseas expansion remains limited, currently accounting for only 4% of its foreign revenue.
Potential Market Implications
The impending margin account closure raises critical questions about the stability of foreign securities firms in the Thai market. Investors and market analysts are closely monitoring the situation, concerned about potential knock-on effects on market liquidity and investor confidence.
Key Concerns includes :
- Potential mass sell-off of securities
- Significant market volatility
- Impact on investor confidence
- Unclear resolution mechanisms
Kitipong Urapeepatanapong, chairman of the Stock Exchange of Thailand, said to Post Today on Thursday that the exchange is aware of the situation and is not taking it lightly. Currently, they are urgently conducting a fact-checking process, and any findings will be promptly communicated.
