Overview of securities market in Vietnam, Papers of Lease Finance and Investment Banking

Download Overview of securities market in Vietnam and more Papers Lease Finance and Investment Banking in PDF only on Docsity! OVERVIEW OF SECURITIES MARKET IN VIETNAM I. History and developments of Vietnam Securities market • November 28, 1996: Establish the State Securities Commission of Vietnam according to Decree No. 75 / CP of the Government. • June 11, 1998: - Vietnam's securities market was officially born when the Government's Decree No. 48 / CP was signed. - Even that day, the Government also signed a decision to establish the Securities Trading Center and will set up bases in Ho Chi Minh City and Hanoi. • June 28, 2000: Ho Chi Minh City Securities Trading Center (HOSTC) (rename to Ho Chi Minh Stock Exchange on August 8,2007 (HOSE)) has officially come into operation, performing the first trading session with 2 tickers: REE and SAM. • March 8, 2005: The Hanoi Stock Exchange (HNX) was officially launched. If the Ho Chi Minh City Stock Exchange is the place to list and trade stocks of large companies, the Hanoi Stock Exchange is the place where the listing of small and medium enterprises is concentrated. • The period from 2000-2005: Marked the beginning of the securities market, also known as the toddler stage. During this period, the market capitalization was only around 1% of GDP, almost not much change. • 2005: Vietnam’s Securities Depository was founded. • From 2006: - The Law on Securities was promulgated by Quoc and officially came into effect from the beginning of 2007, has gradually improved the inadequacies and conflicts with other legal documents, helping Vietnam's securities market to be more integrated with regional and international capital markets. - Marked a strong leap when reaching 22.7% of GDP, the number even continued to rise sharply to over 43% in 2007. - Due to the influence of the financial market and the domestic and world economies, 2008 was a “sad market” year with market capitalization falling sharply, to 18% of GDP. base, especially institutional investors, promote liquidity on the underlying stock market. This is a new turning point for the stock market in particular and the financial market in general. • November, 2019: In response to the current requirements of Vietnam's extensive international economic integration and development, with 92.13% of the National Assembly deputies approved, the 14th National Assembly passed the Securities Law No. 54 / 2019 / QH14, effective from January 1, 2021, replaces the Law on Securities No. 70/2006 / QH11 and Law No. 62/2010 / QH12 amending and supplementing a number of articles of the Law on Securities with many new breakthrough points such as: Improving the conditions for offering securities to the public; improve the quality of financial statements; renewing the business registration mechanism; increase information transparency; agree on a stock exchange; granting additional authority to the State Securities Commission; Increase sanctions to handle violations... • 2020: Show the good resistance to the COVID-19 pandemic. - Vietnam's securities market is considered to be one of the 10 stock markets that are resistant to the Covid-19 pandemic and have the best recovery in the world. - The VN-Index exceeded 1,100 points, reaching 1,103.87 points, a sharp increase of 67% compared to the lowest point of 2020, up 14.9% compared to the end of 2019; The HNX-Index increased by nearly 119% compared to the end of the first quarter of 2020 and 98.1% from the end of 2019. • 2021: Looking forward to challenges and new achievements. - After the unexpected results of 2020, the securities market continues to be forecasted by analysts as optimistic as it is still moving in a mainstream uptrend thanks to growth drivers that continue to signal. On the right track and the State Bank will not adjust its loosening policy... II.Participants in the market 1. ISSUERS There are many publishers, but mainly: - Government - State-owned commercial banks - State-owned enterprises - State-owned enterprises when equitizing According to the Law of Securities 2019: Conditions for a joint stock company to offer shares for the first time include: a) The amount of charter capital contributed at the time of offering registration is from 30 billion VND or more, calculated according to the value recorded in the accounting books; (revised compared to 2006 is 10 billion) b) The business operation of 2 consecutive years immediately preceding the year of registration for offering must be profitable, and at the same time no accumulated loss up to the year of registration for offering. 2. INVESTORS - Population: 97.953.769 million In VN, the domestic trading accounts are 2,91. Assume that each person has an account: => Number of participants in the market: 2,91/97.953.769*100% = 3% population => Huge potential in investing * Types of investors: - Based on the form: + Individual investors: 99,4% + Institutional investors: 0.6% - Based on invesment characteristics: + Professional investors: Commercial banks, financial companies, insurance business, securities trading organization,… + Amateur securities investors: Individual investors,… - Based on personal geographic area: 28/2/2021 + Domestic investor: 2,91 million accounts As one of the preparatory steps towards kick-starting Vietnam’s securities market, the Capital Market Development Board under the State Bank of Vietnam (SBV) was then set up, as by its Governor’s Decision No. 207/QD-TCCB dated November 6, 1993, with the mission of researching, designing the project and preparing necessary conditions for the establishment of the securities market in clearly-defined phases. Under the authorization of the Government, the SBV collaborated with the Ministry of Finance to carry out their researches of issues relevant to the operation of the securities market, propose the suitable model of Vietnam’s securities market, provide part of the future regulatory staff with basic training in securities and securities market, study the actual operations of some securities markets in the region and the world, etc. However, as an agency under the SBV, the work of researching, building the project and determining the model of the securities market in Vietnam met with certain difficulties. Besides, securities is an industry that requires the cooperation and coordination of various organizations and industries. Consequently, in September 1994, the Government decided to set up the Board for Drafting the Decree-Law of Securities and Securities Market headed by a Vice Minister of Finance and assisted by a Deputy Governor of the SBV and a Vice-Minister of Justice. On the basis of the Boards project, the SBVs project and opinions gathered from relevant ministries and industries, the Prime Minister approved of the establishment of the Board for the Preparation of the Securities Market as by the his Decision No. 361/ QD-TTg of June 29th, 1995, with a view to assisting him in giving guidelines for preparing necessary conditions for building up the securities market in Vietnam. This Board was assigned with responsibilities as follows: - Drafting the first legal documents of securities and securities market. - Drafting the Government’s Decree on the establishment of the SSC. - Preparing infrastructure facilities and training the market regulatory officers and practitioners. - Carrying out cooperation projects with other countries and international organizations in the field of setting up the securities market in Vietnam. All of these steps were significant in the sense that they helped push ahead the process of organizing the securities market and the prerequisites for the establishment of a securities regulatory agency with well-defined functions. Under the Government’s Decree No. 75/CP of November 28th, 1996, the SSC was set up as a governmental agency charged with the mission of organizing and regulating the operations in the field of securities and securities market. The establishment of this securities regulator prior to the actual functioning of the securities market itself proved to be an approach well in consistence with the general directives of building and developing the securities market in Vietnam and this determined the birth of the securities market over 03 years later. As mentioned above, the SSC plays a decisive role in preparing necessary conditions for the setup of the securities market and at the same time it is its major job to organize and regulate the securities and securities market operations, with the focal mission of facilitating the process of fund mobilization for development investment, ensuring the orderly, safe, transparent, equitable and efficient operation of the securities market, and no less importantly, protecting investors’ legitimate rights and interests. B, Self-governing bodies: authorized by the administrators to control some parts of the market, adhering to the regulations. They have their own budget and have to work for the well-being of the entire market. There are 2 main types: • Vietnam Association of Financial Investors: self-governing body of securities companies and other members, created to protect the benefits of the members and other investors. Its basic functions are: a universal voice of the securities companies, giving suggestions to the government for a better market. It also provides training, representation, gathering international support. • Stock Exchange: in charge of the transactions with securities eligible to be listed. They operate the market through the structure and regulation system about securities trading.  HO CHI MINH CITY STOCK EXCHANGE (HOSE) In an effort to industrialize and modernize the country, maintain stable economic growth and restructure the economy to enhance its efficiency and competition, Vietnam had needed huge capital of investment. Therefore, building securities market in Vietnam had become urgent demand to mobilize mid-term and long-term capital within as well as outside the country into economic investment through debt securities and capital securities. In addition, equitization of state-owned enterprises along with establishment and development of securities market would create opener and healthier business environment. On July 10th 1998, the Prime Minister signed Decree No. 48/1998/ND-CP on stock and securities market and a Decision to set up two (02) securities trading centers at Hanoi and Ho Chi Minh City. On July 20th 2000, the Ho Chi Minh City Securities Trading Center was officially put into operation and executed the first trading session on July 28th 2000 with 2 types of listing stocks. After 7 years of growing and integrating into the global securities market, the government signed Decision No. 599/QD-TTg on May 11th 2007 to transfer the Ho Chi Minh City Securities Trading Center to Ho Chi Minh Stock Exchange (HOSE). On August 8th 2007, Ho Chi Minh Stock Exchange was officially opened. The Vietnam’s stock market will grow higher and firmer thanks to the following reasons: Vietnam’s strong economic growth in the process of economic integration, more and more foreign investment, the policies of privatizing state-own enterprises and listing afterwards, etc. However, to keep the achievements, the Ho Chi Minh Stock Exchange will have to do its best to perform the following duties: + Create good conditions for joint-stock firms to list their stocks on the exchange; + Develop the information systems in order to publicize information fully, timely and accurately; + Improve software to follow and detect insider and corner trading; + Upgrade the information technology system due to the market’s requirements and international standards; continue applying and completing the “remote terminals” project and turn to non-floor trading method in the future. + Propose sensible policies for a strong securities market; + Continue signing more MoU with other stock exchanges and together hold the cross listing on the exchange floors.  HANOI STOCK EXCHANGE (HNX) The Hanoi Stock Exchange (HNX) was established in accordance with the Decision No.01/2009/QĐ-TTg by Prime Minister on the basis of transforming and restructuring Hanoi Securities Trading Center which was established upon Decision No. 127/1998/QĐ-TTg and came into operation on 08/03/2005. On 24/06/2009, the HNX was inaugurated as a State-owned single-member limited liability company owned by the Ministry of Finance as the representative. As an organizer and regulator of the securities market, the HNX has made considerable contribution to the development of securities market as a whole, supporting the aim of the Nha xuat khau Exporter (4) Théng bao LI (6) (6) Xuat trinh Advise Li Nhan tién Presenting NHTB NHdCB Advising Bank (Nominated Bank) ‘ (7) Hoan tra (7) Xuat trinh (3) Phat hanh LIC Reimbursemen Presenting Issue LIC NHPH LIC 1) Hop dé i k var a Issuing Ban x Gian h in ; i jipment of goods Sales contrct (2) Bon mac (8) Dai tién Apply LIC Retirement fg) NAA ene be Importer c) Vietnam Securities Depository Decision No. 189/2005/QD-TTg dated 27th July 2005 by the Prime Minister on VSD's functions of securities registration, depository, clearing, settlement and provision of supporting services in securities trading Decision no. 2396/QĐ-BTC dated 21st November 2017 (replacing Decision no. 2880/QĐ-BTC dated 22nd November 2013) by the Finance Minister on the Charter of Organization and Operation of Vietnam Securities Depository specifies VSD’s functions as follows: + Ensuring the safety, effectiveness of securities registration, depository, clearing and settlement and other trade support services; protecting legitimate rights and interests of investors. + Providing registration, depository, clearing and settlement services for securities listed, registered for trading, derivatives on stock exchanges and securities of other public companies; other trade support services as stipulated by applicable regulations and laws. + Allocating securities codes, including securities codes registered with VSD and international securities identification numbers (ISINs) for securities issued in Vietnam. + Processing corporate entitlements of securities owners for issuers that are public companies and institutions whose securities are listed/registered for trading on stock exchanges. + Providing the service of stock dividend and bond interest payment agent for issuers. + Acting as a transfer agent and transferring ownership for securities registered with VSD as stipulated by applicable laws and regulations. + Providing registration, depository and transfer agent services for other securities upon agreement with issuers. + Establishing and operating risk management mechanisms, including performance of Central Counterparty (CCP) functions, management of the Settlement Compensation Fund, Clearing fund, securities lending and borrowing system as governed by the Law and regulations on securities. + Providing management services for assets, services for securities investment funds at investors’ requests within the scope of functions and duties of VSD and in compliance with prevailing laws. + Supervising members’ activities to ensure their compliance with VSD’s business guidelines for protection of securities owners’ assets. + Managing foreign ownership of securities as regulated by applicable laws. Supporting market development by providing services of infrastructure, technique, information, training, propaganda and knowledge dissemination. d) Securities investment fund e) Financial intermediaries III. Products in the market  Shares, bonds, fund certificates;  Warrants, secured warrants, pull options, depository receipts;  Derivatives;  Other kinds of securities defined by the Government. 1. Shares are securities that certify their holders’ lawful rights and interests to a portion of share capital of the issuer. • Demonstrated the performance of the stock market Stock market performance is the ratio of the current market capitalization to the market capitalization at the time of the original issue. Through VN index, investors can also base to determine whether the performance of a stock market is okay or not • Describe the recession of the economy When the VN index loses points, it means that the stock market’s activity is falling or recession. Although the assessment of the development of a market is not only based on the VN index, but it cannot be denied that this index will help investors have a basic for evaluation to plan their next investment. 2. How to calculate the VN index The VN index compares the market capitalization at any given time to underlying market capitalization on the original base issue date of July 28, 2000. VN index = current capitalization value base capitalization = 100∗∑ i=1 N P1i Q1 i ∑ i=1 N P0 iQoi Where: P1 i: current market price of share i current Q1 i: outstanding volume (listed volume) of current share i P0 i: price of share I base issue date 28/7/2000 Qoi: volume of share I as of the underlying issue date on 28/7/2000 3. VN index over the year - At the end of the last session in 2000, the VN index reached 207 points, an increase 107% compared to first session. - In 2006, Vietnam joined the WTO, the stock market witnessed the most obvious hot rise. After that hot rise, the market cooled down with many consecutive declining sessions - March 12, 2007 marked a historic milestone of the Vietnam stock market when the VN index closed at 1170.67 points, the highest level in nearly 20 years. - Entering 2008, Vietnam’s stock market entered a period of prolonged downtrend and this is the result of the previous hot stock bubble as well as the global economic crisis. - After years of recovery with many important decisions of the operator, the market started to recover stably: VN index by the end of 2014 reached 546 points. - In the next 5 years, the market continued grow healthy. Especially, 2017 became a memorable year when a series of numbers continuously peaked when the VN index increase 48% to 984 points. - Entering 2019, despite the influence from US- China trade war, the VN index closed the year- end session at 961 points, up 7.7% over the same period. Vietnam market recorded the highest growth rate in Southeast Asia - By 2020, under the influence of the Covid- 19 pandemic, Vietnam’s stock market witnessed a dramatic decline compared to the end of 2019. This is a second largest drop from before to just after the great recession. - In 1/4/2021, the VN index set a new peak of 1,216 points SOURCES: 1. http://ssc.gov.vn/ssc/faces/en/enmenu/ enpages_home;jsessionid=11mkgskCB0khmDvNFTtsmT4VB112w9ltBnYxyb4J1 pMn3YnCzLyy!1127311667!1113823817? _afrLoop=58061641071364874&_afrWindowMode=0&_afrWindowId=iw32zunv u_1 2. https://www.hsx.vn/ 3. https://www.hnx.vn/en-gb/ 4. https://www.vsd.vn/en/ 5. https://text.123doc.net/document/2271076-lich-su-hinh-thanh-va-qua-trinh-phat- trien-thi-truong-chung-khoan-o-viet-nam.htm 6. http://consosukien.vn/thi-truong-chung-khoan-viet-nam-su-truong-thanh-sau-20- nam-hinh-thanh-va-phat-trien.htm 7. https://www.vafi.org.vn/2006/index.php 8. https://www.vcbs.com.vn/en 9. https://www.ssi.com.vn/ 10. https://vietnambiz.vn/ngan-hang-duoc-chi-dinh-nominated-bank-trong-hoat-dong- thanh-toan-quoc-te-la-gi-20190903143816514.htm#:~:text=Ng%C3%A2n%20h %C3%A0ng%20%C4%91%C6%B0%E1%BB%A3c%20Ch%E1%BB %89%20%C4%91%E1%BB%8Bnh%20(ti%E1%BA%BFng%20Anh%3A %20Nominated%20Bank),thanh%20to%C3%A1n%20b%E1%BB%99%20ch %E1%BB%A9ng%20t%E1%BB%AB. 11. https://www.advancedontrade.com/ 12. https://english.luatvietnam.vn/aw-on-securities-no-54-2019-qh14-dated- november-26-2019-of-the-national-assembly-179050-Doc1.html 13. https://vietnambiz.vn/chi-so-vn-index-vn-index-la-gi-phuong-phap-tinh- 20190822091245257.htm 14. https://vn.tradingview.com/symbols/HOSE-VNINDEX/ 15. https://zingnews.vn/20-nam-tu-so-0-tron-trinh-cua-chung-khoan-viet-nam- post1108872.html 16. https://trade.vndirect.com.vn/bieu-do-ky-thuat/