Using marketing meaures to promote cross border listing

MINISTRY OF EDUCATION & TRAINING UNIVERSITEÙ LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BUSINESS SCHOOL MBMM PROGRAM LE CHI THU KHOA USING MARKETING MEASURES TO PROMOTE CROSS - BORDER LISTING FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT Project Tutor: Prof. Dr. SU DINH THANH Ho Chi Minh City 2007 - vi - WORDS OF GUARANTEE I undertake that this is the project of my own. Figures and results which are mentioned in this project are righteous. Project Author Le Chi Thu Khoa - v - ACKNOWLEDGEMENTS Completing a Project is an enormous undertaking. While the Final Project reflects the work of one individual, it cannot be completed without the help, input, support, and encouragement of others. The present case is no exception. There are many people and organizations that contributed greatly to this work. To each of them, I owe my sincere gratitude and appreciation for their assistance, inspiration, and belief in me. First and foremost, I would like to express my sincere thanks to the well support from my Tutor, Professor, Dr. Su Dinh Thanh. Throughout my entire Master program, he has inspired me, challenged me, supported me, and encouraged me to perform at my best. He has provided me with opportunities to grow and learn. He has taught me that learning is a journey, not a destination. Individuals who supported me have set excellent examples for me to follow, raised the bar, and allowed me to explore and discover on my own. Without question, they are true role models. I wish to thank companies, institutions and their associates who participated in this study for their many contributions and insights; for sharing freely of their ideas, experiences, and company strategies; and for extending an open door into their offices. Without their assistance, this study would not have been possible. A special thanks is extended to several industry organizations including the financial, banking and securities institutions, the Tokyo Stock Exchange, the Korea Exchange, the New York Stock Exchange - Euronext, the Singapore Exchange, the Stock Exchange of Thailand, The Hong-Kong Exchange, the Taiwan Stock Exchange, the London Stock Exchange, the Bursa Malaysia Berhad, the Warsaw Stock Exchange and the Prague Stock Exchange… for allowing me to participate in industry conferences to gain new insights and perspectives on my research. Last, and certainly not least, once again I would like to thank Professors from The Ho Chi Minh City Open University, Professors from Solvay Business School – Universiteù Libre De Bruxelles, my colleagues, and classmates for their supports throughout my entire Master program. Words cannot adequately capture or express my appreciation for the many great sacrifices that they have made. - i - APPENDIX Items Pages CHAPTER I: PROJECT’S TARGETS, SCOPES AND METHODOLOLY 1 1.1. Project’s essentials, scientific meanings and practices 1 1.1.1. Project’s essentials and practices 1 1.1.2. Project’s scientific meanings 3 1.1.3. Project’s socio-econo effectiveness 3 1.2. Project’s targets, scopes and methodologies 4 1.2.1. Project’s targets 4 1.2.2. Project’s scopes 4 1.2.3. Project’s methodologies 5 1.3. Project’s structure: 5 CHAPTER II: VIETNAM STOCK MARKET IN THE FACE OF URGENT NEEDS OF CROSS LISTING 6 2.1. Vietnam stock market overview 6 2.1.1. Market structure, size, operations and its strategies of development 6 2.1.2. Vietnam stock market’s development in the face of international and regional integration 7 2.2. Regulations of listing on HoSTC, and on foreign Stock Exchanges 7 2.3. Urgent demands of cross listing 8 2.4. Listing Models in some countries 8 2.4.1. Choosing some target listing markets for Vietnamese enterprises 8 2.4.2. Cross listing requirements at some target markets 9 (1) Singapore (The Singapore Exchange – SGX) 9 (2) Republic of Korea (The Korea Exchange – KRX) 9 2.4.3. Comments on cross listing criteria at target markets 10 2.5. Advantages and disadvantages in cross listing 10 - ii - 2.5.1. Vietnamese enterprises list outside 11 2.5.2. Foreign companies list on VN market 11 2.6. Conclusion of chapter II 12 CHAPTER III: USING MARKETING MEASURES TO PROMOTE CROSS LISTING 13 3.1. Necessary and sufficient conditions to perform cross listing 13 3.2. Using marketing measures to promote cross listing 13 3.2.1. Issue 1: Create marketing plan for preparing and clearing the way 14 3.2.2. Issue 2: Define MIS - Marketing Information System 14 3.2.3. Issue 3: Analyse marketing environment, investor behaviors 15 (1) Analyse marketing environment 15 (2) Analyse investor behaviors 16 3.2.4. Issue 4: Analysis of competition 16 3.2.5. Issue 5: Define segmented and targeted market 17 3.2.6. Issue 6: Design marketing stragegies 17 3.2.7. Issue 7: Organise and perform approaching and penetrating programs 18 3.2.8. Issue 8: Control and appraisal 19 3.3. Perform cross listing operations for VN companies by means of using marketing measures 19 3.3.1. Establish completed legal framework 19 3.3.2. Establishing appropriate marketing plans and strategies 20 3.3.3. Carrying out 20 3.4. Propose specific procedures to support VN company listed outside, by means of applying marketing measures 20 3.4.1. Why is Singapore the first priority? 21 3.4.2. Propose specific procedures to support VN company to be listed on SGX 21 3.4.2.1. Diagram of the process 21 (1) Key steps 23 (2) Supporting Issues for performance 24 3.5. Conclusion of chapter III 24 - iii - CHAPTER IV: RESULTS AND PROPOSALS 25 4.1. Results 25 4.2. Proposals and suggestions 25 4.2.1. Complete legal framework related to cross listing 25 4.2.2. Marketing tools and solutions are needed to pay attention when performing cross listing 26 4.2.2.1. Strategic marketing tools and solutions in short term 26 4.2.2.2. Strategic marketing tools and solutions in long term 27 4.2.3. Compete stock market infrastructures to satisfy cross listing operations 27 4.2.4. Sub-solutions 28 4.3. Conclusion of chapter IV 28 REFERENCES 29 APPENDICES 31 - iv - TABLES AND FIGURES TABLES Items Pages Table 2.1: Vietnam stock market’s size (4/2007) 6 Table 2.2: Number of trading accounts during the past 7 years 7 FIGURES Items Pages Figure 2.1: Structure of Vietnam stock market (4/2007) 6 Figure 3.1: System of Organisation and performance of programs to approach and penetrate foreign securities markets 18 Figure 3.2: Detailed process to help VN company be listed on SGX 21 - 1 - CHAPTER I PROJECT’S TARGETS, SCOPES AND METHODOLOLY 1.1. Project’s essentials, scientific meanings and practices 1.1.1. Project’s essentials and practices “Cross-Border Listing” is a term which is used in stock market’s field, it means that a company in a country is allowed to list on a Stock Exchange of another country, and vice versa. Today, cross listing is an international movement, there are lots of Stock Exchanges in the world seeking for good companies to encourage them listing. This cross listing often brings huge profits those are big listing fees for the Stock Exchanges 1 , moreover it also creates deversification for investors’ portfolios. That means cross listing will create many plentiful goods for stock markets. Companies want to list their shares because of many reasons, the main reason is benefits to the company’s shareholders and Board of Directors: (1) When a company is listed outside, its image will be enhanced, this directly makes share’s liquidity be increased, moreover, company’s foreign shareholders also make potential liquidity be raised, stock price is formed in a more accurate way. (2) The company will have more opportunities and easily to approach foreign capital sources, both in the time of listing and after listing. (3) Short term and long term benefits in the international markets can make the relationships between the company with its customers and suppliers be closer. (4) Enhancement of integrity 1 Example: Initial dual listing’s fees of Singapore Exchange (SGX) is $US 200.000, NYSE- Euronext or NYX is $US 250.000, London Stock Exchange (LSE) is $US 790.000. - 2 - can increase more credit supplying channels for the company, short term credits are also enhanced its competitive strength, as the results, the company can borrow from banks easily. (5) The effection of satisfying strict listing requirements when company went abroad will make it be enhanced its capacity in operations, control systems and managements. All the above benefits will make its intangible assets be increased directly, this valuation will be bigger and bigger. However, the important thing is that the company is needed to consider carefully on cross listing criteria, discuss with its advisor on all factors, and it is needed to be appropriate with its abilities and strategies. VN Government also signed an Agreement with Singaporean Government in connecting financial markets of the two countries, including cross listing operations, linking trading networks between the both Stock Exchanges (Pursuant to the Agreement on co-operations between Vietnam and Singapore dated on 27 July 2004 in Singapore). Up to the time of writing this project, there has not any Vietnamese company listed outside 2 . The reasons are that Vietnam has not got sufficient conditions to perform cross listing operations. Because legal framework has not been perfect, especially for conditions of performing stock-transactions between the Stock Exchanges. 2 Notes: On the 7 th of March 2007, Indochina Capital, a joint venture fund with foreign capital, has its head office in Hanoi and HCMC branch, has been listed its certifates on London Stock Exchange (LSE). Before, Vietnamese Government Bonds with its face value by USD have also issued to the international market in 2005 (USA and Singapore). However, the cross-border listing operations of unit trust and bonds is not in this project’s scope, because the technical process, criteria, dual listing conditions and trading operations after dual listing of unit trusts are different from stocks and bonds. - 3 - 1.1.2. Project’s scientific meanings (1) The project has created scientific backgrounds with systematic natures for promoting the process to support cross listing (scientific backgrounds with systematic natures here in after called “System”). (2) The project has resumed the practices of listing operations in Vietnam stock market, from that point, the project appraised on the trends, levels and abilities to perform this System in future. (3) The project contributed on awareness side based on scientific backgrounds for construction of the System in the upcoming years. The project also proposed realizable models and feasible solutions for the System, based on the actual conditions and context of Vietnam economy and targeted foreign markets as well. 1.1.3. Project’s socio-econo effectiveness (1) This project provided solutions of perfect & development bearing scientific & practised natures for the System. (2) The project created the foundations and movements for cross listing, this leads to the increase of liquidities of listed stocks both in domestic market and foreign ones, help companies be easily to mobilize their capitals in financial market. (3) This project provided supported models for boosting cross listing process with perfect systematic natures. It helps market managing bodies have backgrounds to perform policies for cross listing, helps VN exploit all potential powers of stock market corresponding to its advantages and statures, contributes to the development of Vietnam financial market, enhancing the internal potential powers, creating more jobs, contributing to the development of Vietnam’s economy. [...]... needs to have a marketing group to clear the way to go abroad, and keep its foot print there 3.2 Using marketing measures to promote cross listing - 14 - Issues needed to choose in priority by using marketing measures to promote cross listing here, the writer would like to analyse meanings of common solutions for any company in general which wants to go listing outside 3.2.1 Issue 1: Create marketing. .. role after listing - 13 - CHAPTER III USING MARKETING MEASURES TO PROMOTE CROSS LISTING 3.1 Necessary and sufficient conditions to perform cross listing - Condition 1: Cross listing operations must be governed by legal framework Regulations of foreign exchange management, shares ratio hold by foreign investors, accounting and auditing system…, must be regulated clearly, detailed and easily to carry... competition is needed to focus on two big factors: Competitive market of cross listing and companies compete each other in cross listing (1) Competitive market of cross listing means that foreign markets compete in attracting companies from other countries to their markets In fact, cross listing criteria are very strict in order to select big and strong companies, besides they give incentives to compete with... desires to list, cross listing will be carried out easily Besides, once company has got a strong or very strong marketing group, and has been also supported by financial intermediaries, its cross listing will be easier to get sucess 3.5 Conclusion of chapter III Chapter III has stated and analysed in details on 3 big issues, those are: Applying marketing measures to promote cross listing; Solutions to perform... framework in promoting VN companies to be listed outside and vice versa Then, the project has described and analysed specifically on using marketing measures to promote cross listing; Solutions and sub-solutions to perform cross listing; And proposed detailed process to support VN company to be listed overseas, this process can be used similarly for foreign companies who desire to be listed in VN In practice,... in promoting cross listing operations To be the good pedal for companies, these institutions have to join each other closely, between inside and outside countries, sometimes they have to establish representative offices or branches in foreign countries to enhance its operations Therefore, marketing groups of the companies must establish the good relations to work closely to promote cross listing 3.2.8... facilitated to promote cross listing Regarding to geographic distance, Singapore is very close to VN, this is the key factors to reduce costs and save time Besides, HoSTC and HaSTC have close relationships to SGX, both have signed the MOUs of co-operations with SGX 3.4.2 Propose specific procedures to support VN company to be listed on SGX 3.4.2.1 Diagram of the process Figure 3.2: Detailed process to help... good ways Up to May 2007, there have been 3 seminars and 1 forum hold in VN on promoting cross listing in Singapore, Korea and Malaysia markets; There have been 2 trade promotion programs hold in Singapore on cross listing here (2) Companies who desire cross listing are needed to establish marketing groups - 27 - to research for foreign targeted markets These groups should use marketing tools and solutions... regarding to the process of cross listing 1.2.3 Project’s methodologies From the real situation of Vietnam stock market, based on the experience of other countries, relied on real conditions and context of Vietnam in order to propose solutions for cross listing by using the following methods: (1) Using marketing measures and concepts to consult the targeted markets (2) Using methods of statistics,... of cross listing from SGX The company will submit the copies of decision to SSC and HoSTC, - 24 - simultaneously with information disclosure to the public (pursuant to VN Securities Law) - Step 5: In case of approved decision, the company will then co-ordinate with SGX to hold a meeting to introduce the issuer to the investors in Singapore - Step 6: SGX will hold a ceremony of an official new cross listing . CHAPTER III: USING MARKETING MEASURES TO PROMOTE CROSS LISTING 13 3.1. Necessary and sufficient conditions to perform cross listing 13 3.2. Using marketing measures to promote cross listing 13 3.2.1 listing. - 13 - CHAPTER III USING MARKETING MEASURES TO PROMOTE CROSS LISTING 3.1. Necessary and sufficient conditions to perform cross listing - Condition 1: Cross listing operations must be. legal framework related to cross listing 25 4.2.2. Marketing tools and solutions are needed to pay attention when performing cross listing 26 4.2.2.1. Strategic marketing tools and solutions in