Vietnamese Capital Market: Types of securities Participants Presentation

On July 11th, 1998, The Prime Minister issued Decision No. 1271998QDTTg on the establishment of two Securities Trading Centers in Hanoi and Ho Chi Minh City under the management of the State Securities Commission (SSC) of Vietnam. The Stock Trading Center of Vietnam is also the official mechanism.There are 120 listed bonds with a total market capitalization of US866m.

Vietnamese

Capital Market

Types of securities & Participants

Outline

Historical development of

Securities in Vietnam

Major participants in the

Vietnamese capital market

Types of securities traded on the market

Issuing securities

 The Stock Trading Center of Vietnam is also the official mechanism.

 There are 120 listed bonds with a total market capitalization of US$866m.

HoChiMinh Stock exchange (HOSE)

 Augurated on July 20, 2000

 Trading commenced on July 28, 2000 with 2 types of listing stocks in the first trading

session

 Transferred the Ho Chi

Minh City Securities

Trading Center to

HoChiMinh Stock Exchange

(HOSE) on July 11th, 2007.

Hanoi Stock Exchange (HNX)

 Is a trading market for stocks of small and

medium-sized enterprises in Hanoi

 Was officially inaugurated putting up a new milestone

of Vietnam’s securities market on March 08 th , 2005

 Was awarded Third-Rank Labor Medal by the State for outstanding achievements in the development of the stock market in 2008

Major participants

Issuers

Dealers Regulators Investors

s

Listed companies

Unlisted public companies Government

 Number: >300

 16% of them made loss

and 60% had profits

decreased in 2011.

 80% were underpriced.

 Number: >450

 Issuing shares to UPCOM

 Market capitalization from bonds: VND 81.5 trillion (2011)

Total market capitalization of VND 602 trillion, accounting for 25% of GDP in 2011.

Securities companies (103) Fund management companies (47)

 24 made loss in 2011.

 Ho Chi Minh Stock Exchange (HOSE) – 2000

 Hanoi Stock Exchange (HNX) -2005

 Contains 15.589 foreign investors, including 1.741 institutions and 13.848 individuals up to 2012.

 Decreased by 70%

compared to 2011.

Types of securities

III

• In the derivative instrument market

I In the bond market

• Refer to as risk-free bonds

• Have no tax-paid but low rate of return

• Issue on the primary market by bidding method

Yield movements

I In the bond market (cont.)

 Corporate bonds

• Issued by a corporation

• Have a higher risk of default in compare

with government bonds

• Have to pay taxes on the interest earned

and also have a higher rate of return

• In Vietnam, Total LCY corporate bonds

outstanding rose 18.9% y-o-y to VND33 trillion in 2Q11 but fell 5.9% q-o-q

(Table 2)

II In the stock market

non-• Convertible

 In Vietnam, the

preferred share is essentially issued

internally.

III In the derivative instrument market

 Options contract

• Financial contract between two parties, the

buyers and the sellers.

• Give the option-buyer the right but not the

obligation to buy or sell.

• The price established is known as exercise price,

or strike price That is the price at the day which contract is able.

• Not be exercised if it is not in the option-buyer’s best interest.

• Divided into two types: Call option and Put

option

III In the derivative instrument market

 Vanilla options

1. Call option:

 Give the option-buyers the right to buy.

 Buyer gains if the price of the underlying

assets higher than the exercise price.

2. Put option:

 Give the option-buyer the right to sell.

 Buyer benefits if the price of the underlying

assets is below the exercise price

III In the derivative instrument market (cont.)

PUBLIC PLACEMENT

IPO

SPO

Reasons:

• Below standard of public placement

• Small mobilized capital

• Relationships maintenance

Seasoned Public Offering

www.ssc.gov.vn/portal/page/portal/ubck/gthieu/t tgdck

 http

://www.ssc.gov.vn/portal/page/portal/ubck/csdlct y

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