How to trade stocks understanding the operations of vietnamese stock markets (at HNX)

Ministry of Education & Training National Economic University CASE STUDY How to trade stocks? Understanding the operations of Vietnamese stock markets (at HNX) Major: Finance –Banking _Class: Banking 56 Group Hanoi Date: Tuesday, May 24, 2016 Project work (ASSIGNEMNT 2) How to trade stocks? Understanding the operations of Vietnamese stock markets Content Listing requirements Type of transaction; type of order Trading time and trading session Price change step and limits Summary of information disclosure requirements Operations and index performance in 2014, 2015 (listing, trading volume, IPOs) Example of trading information of a listed stock Other relevant content Ho Chi Minh City Stock Exchange Group 1,3,5,7,9 Notice the structure of the exchange: stock market, bond market, and UPCOM Team members Nguyễn Thị Hoàng Hà (team leader) 11141040 Vũ Thị Quỳnh Anh 11140295 Lê Quỳnh Anh 11140275 Trần Thị Hồng Vân 11145002 Lê Thị Minh Ngọc 11143141 Group – Banking 56 Hanoi Stock Exchange Group 2,4,6,8 Page A- INTRODUCTION Hanoi Stock Exchange (HNX) was born in accordance with Decision No.01/2009/QĐ-TTg by Prime Ministeron the basis of transforming and restructuring Hanoi Securities Trading Center which was established upon Decision No 127/1998/QĐ-TTgand launched on 08/03/2005 On 24/06/2009, the HNX was inaugurated as a State-owned single - member limited liability company with the Ministry of Finance as a representative Being an organizer and regulator of the securities market, the HNX has organized share auctions, Government Bond biddings to mobilize capital for the State budget In parallel, the HNX has operated three secondary trading markets on a modern technological structure, including listed stock market, Government Bond market, and UPCoM (Unlisted Public Company Market) The optimal goal of the HNX is to operate an transparent, equitable and efficient market, develop new products, attract domestic and foreign investments, and prove itself as an important capital mobilizing channel of the economy, ensuring the interest of investors and market participants Group – Banking 56 Page BI ANALYSIS Listing requirements[1] When a company issues its stock to the stock market, it need to follow the general regulations There’re some requirements for listing in HNX: Conditions for stock listing - Being a joint stock company having the minimum charter capital of VND 30 billion or more ; calculated at book value at the time of application for listing; - There is at least 01 year of operation in the form of Joint Stock Company by the time of registration for listing; return on equity (ROE) of the latest year is at least 5%; there is no overdue debt for more than 01 year; there is no accumulated loss as of the year of listing registration; all financial obligations to the State must have been discharged; - At least 15% of the voting stocks of the company held by at least 100 shareholders who are not principal shareholders; - Shareholders being members of the Board of Directors, Supervisory Board, the Manager or General Manager, the Deputy Manager or Deputy General Manager and the Chief Accountant of the company; or connected person with Board of Directors, Supervisory Board, the Manager or General Manager, the Deputy Manager or Deputy General Manager and the Chief Accountant of the company must commit to hold 100% of their shares for a period of months from the listing date and 50% of the shares for the following months excluding the stocks under the state ownership owned by the above individuals representing to hold - There is valid dossier of stock listing registration as prescribed Group – Banking 56 Page Conditions for bond listing - Being a joint stock company, limited liability company or State owned enterprise having the minimum charter capital of VND 10 billion or more calculated at book value at the time of application for listing; -The business result of the preceding the year must be profitable; - At least 100 persons own bonds which are issued in one round - All bonds of one issue must have the same maturity date - There is valid dossier of bond listing registration as prescribed Type of transaction; type of order II Type of transaction: - Continuous order matching method: is the method in which the system will automatically match buy orders will with sell orders right after they are put into the trading system - Periodical order matching method: is trading method executed by trading system where buy and sell orders are correspondingly matched at a specific point of time - Negotiation method: is the method whereby buyers and sellers negotiate with each other on the transaction conditions in advance, then the trading result will be placed into the trading system Type of order: - Limit order (LO):is an order to buy or sell a stock at a specific or better price Better price is the price higher than the specific price in case of sell order and lower than the specific price in case of buy order LO is entered into the trading system in continuous order matching and prediocial order matching Group – Banking 56 Page - Market order: is the buy order at the lowest sell price or the sell order at the highest buy price available on the market Market order is only entered into trading system in the continuous order matching session Types of market orders: + The Market To Limit order (MTL): is a market order in case it is not fully executed, the remainder of the order is changed into litmit order In case of buy order, the remainder of the order is changed into buy limit order with the price either one (01) tick higher than the previous match price or ceiling price if the previous match price is ceiling price In case of sell order, the remainder of the order is changed into sell limit order with price either one (01) tick lower than the previous match price or the floor price if the previous match price is the floor price + Match or Kill order (MOK): is a market order which will be killed right after entering into the trading system if it is not fully executed + Match and Kill order (MAK): is a market order which may be fully or partially executed, the remainder of the order will be killed right after the order matching + At The Close order (ATC): is a buy or sell order at the close price ATC order is only entered into the trading system in the periodically order matching session After the matching period, fully or remaining unexecuted order will be killed III Trading time and trading session[2] Trading time of listed stock market: Session Morning Group – Banking 56 Trading method Continuous order matching Page Trading hour 9:00 am – 11:30 am session Break time Afternoon session Negotiation 9:00 am – 11:30 am 11:30 am – 1:00 pm Continuous order matching 1:00 pm – 2:30 pm Periodical order matching for 2:30 pm – 2:45 pm closing session Negotiation 1:00 pm – 3:00 pm Trading time of UPCoM: Session Morning session Break time Afternoon Trading method Continuous order matching Negotiation Trading hour 9:00 am – 11:30 am 9:00 am – 11:30 am Continuous order matching Negotiation 11:30 am – 1:00 pm 1:00 pm – 3:00 pm 1:00 pm – 3:00 pm session HNX organizes trading from Monday to Friday every week (except for holidays as regulated in the Law of Labor) IV Price change step and limits (HNX) STOCKS MARKET[3]  Don’t regulations exchanges unit with stock transaction agreement Applying weigh minimum exchanges with transaction agreement are 5000 stocks  Stock exchange : weigh 1-99 stocks can product by transaction agreement ways in exchange system HNX or different forms according to regulations of the Law  Price change step : +/-10 % Price range for stock is calculated as below: Group – Banking 56 Page • Ceiling price = Reference price + reference price x price collar • Floor price = Reference price – Reference price x price collar After the above adjustment, if ceiling/floor price of stock  is still equal to reference price, then there is adjustment as follows: +Adjusted ceiling price = Reference price + one quotation unit +Adjusted floor price = Reference price – one quotation unit BOND MARKET[3 ] • Exchange unit with bond matched transaction are 100 bonds Don’t regulations exchanges unit with bond transaction agreement • Weigh minimum exchange with transaction agreement are 1000 bonds • Bond exchange weigh 1-99 bonds • Don’t apply price change step with bonds UPCOM [4] Weigh minimum exchanges are 10 stocks or 10 bonds - Price quotation units + stocks : 100 Dong and don’t apply price quotation units with bonds Denominations are 10,000 Dong/stock and 100,000/bond - Price change step[5] : +/-15% with stocks and it can change during in product time Group – Banking 56 Page V Summary of Information disclosure requirements (1) Information disclosure entities Information disclosure entities on Hanoi Stock Exchange (HNX) include: Listed institutions; Trading registration institutions ; Member securities companies; Institutions or individuals who implement the tender offer for listed/registered shares at HNX; Principal shareholders, founding shareholders, PDMRs, officer authorized to disclose information and connected persons of these objects according to Clause 34, Article of Securities Law (2) Information disclosure requirements The information disclosure must be sufficient, accurate and timely as stipulated by law Information disclosure entities are responsible for the information disclosed The information disclosure of institutions who are Information disclosure entities as at Article (One) of this regulation must be performed by the legal representative or the officer authorized to disclose information 2.1 In case Information disclosure entities as at Clause 1, 2, of Article (One) of this regulation disclose information, these entities must register the authorized information disclosure officer with HNX according to the form at Appendix I of Circular No 52/2012/TT-BTC issued on 05/04/2012 by Ministry of Finance, and concurrently send the list of persons related to information disclosure officer (according to the attached form CBTT/SGDCKHN-01) with the CV of information disclosure officer within ten (10) working days since the authorization takes effect 2.2 In case Information disclosure entities as at Clause 4, of Article (One) of this regulation authorize listed institutions/ trading registration institutions/ member securities company or depository member to implement the information disclosure under the approval of State Securities Committee (SSC), these objects must notify in writing (according to attached form CBTT/SGDCKHN-02) with authorization letter/ valid authorization contract as stipulated by law Group – Banking 56 Page 2.3 In case of changing institutions, individual authorized to disclose information, Information disclosure officers as at Point 2.1 and 2.2 above must notify in writing (according to attached form CBTT/SGDCKHN-03) at least five (05) working days before expected changing date Information disclosure entities as at Clause 1, 2, of Article (One) of this regulation implement the information disclosure on their own means of disclosure and concurrently send the information to HNX and SSC to report Information disclosure entities as at Clause 4, of Article (One) of this regulation must send the information to listed institutions/ trading registration institutions and HNX and SSC simultaneously to report when implement the information disclosure Founding shareholder in the limited transfer period must report additionally to Vietnam Securities Depository Information disclosure entities as at Clause 1, 2, of Article (One) of this regulation must register with HNX for the contact information including: address, tel., fax, email, etc In case of changing registered information, Information disclosure entities must notify in writing (according to attached form CBTT/SGDCKHN-04) at least three (03) working days before the expected changing date The date of information disclosure is the date that information appears on the website and/or annual report, other publications of Information disclosure entity Information disclosed on the website must specify disclosure time (date, hour) The report date about the information disclosure is the date when Information disclosure entities send electronic data through the CIMS system, email, date of sending fax, date of HNX receiving information disclosed in writing according to Dispatch mark of HNX In case Information disclosure entities must send report in writing and electronic data simultaneously, the report date is the date when HNX has received both of the reports The language of the disclosed information must be Vietnamese In case required by law that the disclosed information can be supplemented by other languages, the languages of the disclosed information include Vietnamese and other languages as stipulated by law The words of disclosed information must be clear, easy to understand and avoid misleading for shareholders and investors The disclosed information must be exact with the form promulgated together with Circular No 52/2012/TT-BTC, this regulation and others related In case Information disclosure entities send information to HNX with wrong form or missing some information as requirement, HNX will not disclose information on means of disclosure of HNX Group – Banking 56 Page 10 _ companies canceling share trading with share volume canceling registered trading are 237,703.156 shares and share value canceling registered trading are 2,377,031.56 VND b Trading scale: _The average trading value in a session increased by 972.25% _ The average trading volume in a session increased by 590.45% _UPCoM Index has 105 sessions losing point, 140 sesions increasing point and sessions no changes in points, a total increase 17.84 points (42.02%) devoted to the end in 2013, stop at 60,3 point _ Highest UPCoM – index 125.6 and lowest UPCoM- index 41.97 _ The total trading volume of the market reached 546.56 million shares, trading value reached 5.410 billion On average, trading volume reached 2.21 million shares / session, a trading value reached 21.9 billion ( increase 590,45% about average trading volume and 972,25% about average trading valuecompared to 2013) 6.3 (a) The government bonds in 2014 * The primary market of government bonds Group – Banking 56 Page 14 _ In 2014, the Hanoi Stock Exchange held 224 sessions for the issuing organization : State Treasury, Vietnam Development Bank, the Bank for Social Policies, People's Committee of Hanoi City, the People's Committee of Da Nang City with record volume 240.84 trillion on the total volume of calls for tender is 365.5 trillion., total bid volume 628,673.14, total payment 244,017.2 and 25 bidding members _ The rate in 2014 winning increased 13.3% compared to 2013 The average issuance term in 2014 is 5.05 years and the term of government bonds by the State Treasury issuance is 5.28 years * The secondary market of government bonds: _Liquidlity of the bond market in 2014 was significantly improved when the total trading value reached 882 trillion in government bonds and treasury bills reached 17.6 trillion _In average,traded value per session government bonds reached nearly 3.57 trillion and traded value of treasury bills reached 71.31 billion _ Coefficient of liquidity (total trading value on the average listed size) in 2014 reached 1.05, up 7% compared to 2013 _ Average listed tenor by the State Treasury Government bond issuance is 3.01 years _Listed scale of the market reached 691.2 trillion The average listed term of the market is 2.88 Group – Banking 56 Page 15  2015  Overall about economic in 2015 Economy - society in 2015 took place in the context of global market having some of turmoil, the world economy still faces a big risk with unpredictable factors The world economy has not regained momentum and slow recovery The growth rate (GDP) in 2015 reached 6.68% rate 2015 recorded consumer price index (CPI) rose the lowest in many years, was only 0.63% Trade deficit trend is beginning to return in 2015 Therefore, Stock market faces many difficulties, but there are positive signs 6.1(b) Listed stock market in 2015: _ Trading volume : 11,554,450,262 shares _ Trading value: 135,035,878,225.6 vnd _Market Capitalization: 151,607,768,327.3 vnd _Average market capitalization: 142,556,392,680.6 vnd _No of sessions: 248 sesions _Highest sessions : highest volume: 94,923,398( 08/06/2015) Highest value: 1,135,663,001.7 VND( 08/06/2015) _Lowest sessions: lowest volume: 22,570,268( 01/10/2015) Lowest value: 256,316,138.5 VND( 01/0/2015) Group – Banking 56 Page 16 Figure 6.1b: Listed stock market in 2015 6.2 (b) The registered trading unlisted public companies market (UPCoM) _Total trading volume: 934,613,568 shares _Total trading value: 14,288,084,712.4 VND _Market Capitalization: 61,033,252,069.6 VND _Average market capitalization: 43,530,756,382 VND _No of tradable stocks: 256 _No of sessions: 248 _Highest sessions: Highest volume: 126,268,081 (25/12/2015) Highest value: 3,412,563,209.7 VND ( 19/10/2015) _Lowest sessions: Lowest volume : ( 24/04/2015) 819,274 lowest value: 4,704,886.2 VND( 15/09/2015) Group – Banking 56 Page 17 Figure 6.2b: The registered trading unlisted public companies market (UPCoM) in 2015 (unit: VND thousand) 6.3 (b) The government bonds in 2015 _Listing volume: 7,434,009,375 vnd _New listing volume: 2,099,483,000 VND _Additional listing volume: 915,703,141vnd _Delisting volume: 2,392,738,900vnd IPOs 2014: In 29 auction shares to the public for the first time the HNX, there are three large-scale sessions, but all three sessions having in common is not sold out more than 50% of the shares offered 2015: By the end of October, with 51 IPOs was held in Ha Noi Stock Exchange in 2015, the average month held sessions in the IPO Of these, 33 sessions sold out 100% of the shares offered, equivalent to 64.7% According to the auction plan was announced as at 31-10-2015, in November, nine enterprises registered auction of shares in the Hanoi Stock Exchange, including eight sessions IPOs Group – Banking 56 Page 18 VII Example of trading information of listed stock 7.1 Overview [8] - Company’s name: HaiHa Confecsionary Joint – Stock Company - Website: www.haihaco.com.vn - Products/ Main services : confectionary - HHC is one of the largest confectionery manufacturers in Viet Nam - The company which was founded in 1960 and spent more than 50 years striving and developing has grown ceaselessly and accumulated much experience in business production - In 2003, the company decided to transform into Joint stock Company according to the Resolution No 191/2003/QĐ-BCN of Ministry of Industry dated 14 November 2003 Group – Banking 56 Page 19 * Stock information - The first trading day: 20/11/2007 - First listed volume : 5,475,000 - Listed shares: 8,212,500 - Shares outstanding: 8,212,500 - The closing price of the first trading day (thousand dong): 73.0 - The volume of shares listed first: 5,475,000 7.2 Information transaction of Haiha Confectionery JSC (HHC) Update at : Tuesday, Reference price 20,300 17/05/2016 Opening price 20,300 Highest price 21,000 Lowest price 20,100 Closing price 20,300 Total trading volume (share) Total trading value 148,090,000 Unit cost : 1000 VND 7.3 Technical chart [9] From 16/03/2016 to 16/05/2016 Group – Banking 56 Page 20 7,300 The chart shows the HHC stock price is fluctuate constantly from during three months On May 4th, the price was lowest during months (from 16/3 to 16/5) that lead to the highest volume (48,100) 7.4 Summary of HHC In conclusion, up to now, HHC has taken right steps in conducting its operations Its stock market is much eventful with large trading volume, so that it attracts a significant number of investors inside and outside Vietnam However, HHC should pay more attention to the customers’ income in order to offer them affordable products Also, it is necessary for HHC to execute some plans to avoid frequent decreasing in stock price That are the two big problems that HHC ought to solve as soon as possible Group – Banking 56 Page 21 C- Conclusion With these results, In future, HNX will concentrate on developing markets following general standards and the best international practices in compliance with legal regulations, suitable to real-world conditions and future socioeconomic development of Vietnam, and in conformity with development and financial strategies of stock markets and future development to become Financial Center of the Capital Hanoi Group – Banking 56 Page 22 D- REFERENCES [1] http://hnx.vn/en/web/guest/tieu-chuan-niem-yet [2] http://hnx.vn/en/web/guest/343 [3] https://www.fsc.com.vn/fscportal/pages/support.do? pagecode=Help_trading_hnx [4] https://www.fsc.com.vn/fscportal/pages/support.do? pagecode=Help_trading_upcom [5] http://tinnhanhchungkhoan.vn/chung-khoan/upcom-dieu-chinh-bien-dodao-dong-gia-len-15-124432.html [6] Summary of Information disclosure requirements - Law on securities No 155/2015/TT-BTC Regulations on information disclosure at HNX (Issued together with Decision No 250/QD-SGDHN on 06/06/2013 by Chief Executive Officer of Hanoi Stock Exchange) [7] Operations and index performance in 2014, 2015 - Statistics 2014 at HNX Annual report 2014 at HNX http://tapchitaichinh.vn/nghien-cuu trao-doi/trao-doi-binh-luan/kinh-te-viet-namnhin-lai-nam-2015-va-trien-vong-2016-76096.html http://hnx.vn/en/web/guest/thong-ke http://hnx.vn/en/web/guest/ket-qua-giao-dich2 http://hnx.vn/en/web/thi-truong-trai-phieu/thong-ke# [8] http://www.haihaco.com.vn/gioi-thieu-chung-88133.html [9] https://www.vndirect.com.vn/portal/bieu-do-ky-thuat/hhc.shtml  Group – Banking 56 Information disclosure Form Page 23 Information Disclosure Form/HNX-01 (Issued together with Decision No 250/QĐ-SGDHN dated 06/06/2013 of Chief Executive Officer of HNX on the Regulations on Information Disclosure at HNX) ORGANIZATION NAME: No.: / Socialist Republic of Viet Nam Independence – Freedom - Happiness Hanoi, date LIST OF PERSON DISCHARGING MANAGERIAL RESPONSIBILITY (PDMR), AUTHORIZED PERSON FOR INORMATION DISCLOSURE AND RELATED PERSON (As on _/_/_) To: Hanoi Stock Exchange Name of N PDMR/ o related person (*) Ge nd er IDCard/Passport/Business IDCa Rel Registration Certificate Typ rd Date of atio e of No./ appointe n Date of shar Passp d Plac Title wit issue ehol ort of (date/mo Ty N e of h (date/month/ der PDM nth/year) pe o issu PD year) R e MR Note: - (*) List the related persons right after related PDMRs; - Only fill in column with related persons; - Only fill in column 11, 12 with PDMRs Group – Banking 56 Page 24 10 11 12 Account No Opening date (date/mont h/year)) 13 14 Shar Add ehold ress ing 15 16 Tel 17 F a x Nati onali ty 19 Representative of Organization The legal representative/Information disclosure officer ( Sign, full name, position and seal) 25 Information Disclosure Form/HNX-02 (Issued together with Decision No 250/QĐ-SGDHN dated 06/06/2013 of Chief Executive Officer of HNX on the Regulations on Information Disclosure at HNX) SOCIALIST REPUBLIC OF VIET NAM Independence – Freedom - Happiness ………., date… month … year… REPORT ON THE AUTHORIZED PERSON TO MAKE INFORMATION DISCLOSURE (For principal shareholder, founding shareholder, PDMR, Person authorized to make information disclosure) To: Hanoi Stock Exchange Name of individual/organization authorize: - ID Card/Passport No (Business Registration Certificate No – if being organization): - Address: - Phone No Fax: Email: - Current title at listing organizations/trading registration organizations/ member securities companies(if any): Name of key personnel /person authorized to make information disclosure of listing organizations/trading organization/ member securities companies related (If the person who authorizes is related person): - ID Card/Passport No (Business Registration Certificate No – if being organization): - Address: - Phone No Fax: Email: - Current title at listing organizations/trading organizations/ member securities companies: - The relationship of trading individuals/organizations with key personnel /person authorized to make information disclosure: Stock code: Name of organization authorized to make information disclosure: - Business Registration Certificate No.: - Address: - Phone No Fax: Email: Contents authorized: Time authorized: * Attached documents Letter of authorization/Authorization contract on information disclosure Group – Banking 56 Individual/organization ( Sign, full name, position and seal – if being an organization) Page 25 25 26 Information Disclosure Form/HNX-03 (Issued together with Decision No 250/QĐ-SGDHN dated 06/06/2013 of Chief Executive Officer of HNX on the Regulations on Information Disclosure at HNX) ORGANIZATION NAME No.: SOCIALIST REPUBLIC OF VIET NAM Independence – Freedom - Happiness / ………., date … month … year… REORT ON THE CHANGE IN THE PERSON AUTHORIZED TO MAKE INFORMATION DISCLOSURE To: Hanoi Stock Exchange A Information disclosure officer is listing organizations/trading organizations/ member securities companies: I Organization makes information disclosure: - Organization name: - Stock code: - Address: - Phone No.: Fax: - Website: Email: II Contents of information disclosure: Pursuant to Letter of Authorization on information disclosure No dated of ., we beg to inform the change in the person authorized to make information disclosure as follows: New information disclosure officer: Mr./Mis Title: Old information disclosure officer: Mr./Mis Title: Effective date: _/_/_ The reason for change (if any): B If information disclosure officer is principal shareholder, founding shareholder, PDMR, person authorized to make information disclosure and related person: I Organization/information make information disclosure: - Name of individual/organization carry out authorization: - ID Card/Passport No (Business Registration Certificate No – if being organization): - Address: - Phone No Fax: Email: - Current title at listing organizations/trading organizations/ member securities companies if any): - Name of key personnel /person authorized to make information disclosure of listing organizations/trading organizations/ member securities companies related (If the person who authorizes is related person): - ID Card/Passport No (Business Registration Certificate No - if being organization): - Address: - Phone No Fax: Email: - Current title at listing organizations/trading organizations/ member securities companies: Group – Banking 56 Page 26 26 27 - The relationship of trading individuals/organizations with key personnel /person authorized to make information disclosure: - Stock code: II Contents of information disclosure: Pursuant to Letter of Authorization on information disclosure No dated of ., we beg to inform the change in the organization authorized to make information disclosure as follows: New organization authorized to make information disclosure: - Organization name: - Address: - Phone No.: Old organization authorized to make information disclosure: - Organization name: - Address: - Phone No.: Effective date: The reason for change if any): Individual/organization * Attached documents ( Sign, full name, position and seal – if being an Letter of organization) authorization/Authorization contract on information disclosure Group – Banking 56 Page 27 27 28 Contents 28 ... and the Chief Accountant of the company must commit to hold 100% of their shares for a period of months from the listing date and 50% of the shares for the following months excluding the stocks. .. value at the time of application for listing; - There is at least 01 year of operation in the form of Joint Stock Company by the time of registration for listing; return on equity (ROE) of the latest... least 15% of the voting stocks of the company held by at least 100 shareholders who are not principal shareholders; - Shareholders being members of the Board of Directors, Supervisory Board, the Manager