Vietnam is a developing country and on process of modernization and industrialization. There are plenty of potential sources to make investment. Therefore, it is really challenging for any investment institutions to decide where to put funds on. PetroVietnam Finance Corporation under the control of Vietnam National Oil and Gas Group is one of the leading investment institutions. Strategic development of the petroleum industry from 2015 to 2025 will quickly make PetroVietnam Finance Corporation or PVFC the most essential Industry-Finance-Commerce Group, which completely develops activities in domestic and abroad. With the prestige and scale of PVFC, it can approach various sources of fund with large volume, specifically capital investment, equity and also various trust funds. It also helps PVFC a great deal in diversification on the capital market and always gets funds from an available source even when market is bad. Nevertheless, in the current context of economic integration and Vietnamese economies in general, the investment climate in has many opportunities as well as challenges. In detail, for the securities market of Vietnam, securities investment also faces a greater challenge. In addition, the problem of managing capital is also worth mentioning. Therefore, to manage portfolio and capital effectively as well as archive strategic goals of PVFC in the finance sector is extremely important. Repurchase agreement transaction is one of the most developed investment activities of PVFC due to its benefit to the investor and the Corporation. However, some limitations and risks still present along with the systematic risks associated with securities. On financial markets, this kind of transaction is developing and plays an important role as in the way that investors can be more active and flexible in choosing the tools to participate the market. Eventually, after taking careful consideration about the usage of repurchase agreement, I’ve chosen “The situation of repurchase agreement procedure at PetroVietnam Finance Corporation and recommendation for future development” as my graduation thesis.
TABLE OF CONTENTS ABBREVIATIONS BV: Book to Value PVFC: PetroVietnam Finance Corporation P/E: Price/Earning .4 Repo: repurchase agreement SSC: State Securities Commission .4 USD: United State Dollar LIST OF TABLES AND FIGURES EXECUTIVE SUMMARY INTRODUCTION Rationale: .7 Research objectives: Research methodology: Research scope: .8 Research structure: CHAPTER 1: THEORETICAL FRAMEWORK 1.1.2 Risks incurring in securities trading .1 1.2.2 Uses of repurchase agreement transaction 1.2.3 Types of repurchase agreement transaction .5 1.3.2 Role of securities market: 14 Chapter 2: CURRENT SITUATION OF REPURCHASE AGREEMENT PROCEDURE AT PVFC 18 2.1.2 Function, mission, power and obligations of the corporation 19 2.1.2.1 Functions: 19 2.1.2.2 Power and obligations: .20 Instructor: Bui Huy Nhuong, PhD Student: Dam Thi Thu Trang – Advanced Finance 48 2.1.3 Businesses: 21 2.1.4 Overview of PVFC – Ho Chi Minh City Branch 21 2.1.4.1.Historical foundation, function and mission of the branch: 21 2.1.4.2 Organizational structure: 23 2.1.4.3 Business performance in period from 2005 to 2009 24 2.2 Current situation of repurchase agreement procedure at PetroVietnam Finance Corporation 25 2.2.1 Procedure of repurchase agreement of PVFC 25 2.2.1.1 Conditions conducting repurchase agreement 25 2.2.1.2 Procedures implemented securities trading period 28 2.2.1.3 Repurchase agreement contract (Repo contract): 32 2.2.1.4.During the time of contract performance: 37 2.2.1.5.Handling maturity contract 39 2.3 Evaluation of repurchase agreement procedure: 42 2.3.1 Current achievement: 42 2.3.2 Limitations and reasons .43 2.3.2.1 Inefficient securities assessment and stock picking: 43 2.3.2.2 Valuation of securities: .44 CHAPTER 3: ENHANCING THE REPURCHASE AGREEMENT PROCEDURE AT PVFC 45 3.1 Orientation for future development of PetroVietnam Finance Corporation 45 3.3.2 Recommendation to government 54 3.3.2.1 Better implementation of auditing process 54 3.3.2.2 Supporting SSC in the information collecting operation and regulating the repo operation 54 3.3.2.3 Standardize the legal framework 55 3.3.2.4.Controlling the fluctuation of interest rate: 55 Instructor: Bui Huy Nhuong, PhD Student: Dam Thi Thu Trang – Advanced Finance 48 CONCLUSION 56 REFERENCES 57 SUPERVISOR JUDMENT 58 CRITIC EVALUATION 59 Instructor: Bui Huy Nhuong, PhD Student: Dam Thi Thu Trang – Advanced Finance 48 ABBREVIATIONS BV: Book to Value PVFC: PetroVietnam Finance Corporation P/E: Price/Earning Repo: repurchase agreement SSC: State Securities Commission USD: United State Dollar VND: Vietnam Dong Instructor: Bui Huy Nhuong, PhD Student: Dam Thi Thu Trang – Advanced Finance 48 LIST OF TABLES AND FIGURES Figures Figure 1.1: Market capitalization of the STC for the period from July 28th, 13 2000 to December 31st, 2005 Figure 1.2: VNINDEX changes over the period from July 28th, 2000 to December 31st, 2005 14 Figure 2.1 Logo of PetroVietnam Finance Corporation 19 Figure 2.2 Business performance of Ho Chi Minh City branch in the period of 25 2005-2009 Tables Table 1.1 Key indicators for the STC over the period of 2000-2005 12 Table 2.1 Operating businesses 21 Table 2.2 Business performance report in period from 2005 to 2009 25 Table 2.3 List of eligible trading bonds 27 Table 2.4 List of eligible trading securities 27 Table 2.5 Comparison of SSG with a target number of units of the same 31 industry Table 2.6 List of cost statistics 41 Table 2.7 Comparing the competitive advantages of repo over regular loan 44 EXECUTIVE SUMMARY Investment activities are one of the most beneficial activities for any companies Instructor: Bui Huy Nhuong, PhD Student: Dam Thi Thu Trang – Advanced Finance 48 Nowadays investment activities are attracting more and more participations from every class of society such as: businessmen, workers, housewives and even students Investment institutions are also trying to broaden types and applications of investment activities in order to efficiently supply the demand of as many customers as possible One of the most developed and recent kind in Vietnam is repurchase agreement This kind of transaction leverages as well as reserves the capital of customer by temporally holding the ownership of the customers’ assets then allowing them to buy back in the future with the price and term stated clearly in a repo contract Chapter is theoretical framework which give the reader basic knowledge of securities, stocks and securities market of Vietnam This chapter will draw a general picture of securities investment activities of Vietnam, such as their benefits to investment institutions along with investors Risk incurring in the process of investment will also me mentioned in order to give a better background to the reader Chapter will give information about PVFC as a whole corporation with its developed investment activities Moreover, this chapter also gives readers knowledge of the process of repurchase agreement procedure and its application at PVFC Some assessments will also be stated, which include achievements and limitations After taking a look at repurchase agreement procedure and giving assessment, chapter contains some suggestions to improve the repurchase agreement transaction at PVFC as well as some recommendations for the Government and State Securities Commission in regulating repurchase agreement activities Instructor: Bui Huy Nhuong, PhD Student: Dam Thi Thu Trang – Advanced Finance 48 INTRODUCTION Rationale: Vietnam is a developing country and on process of modernization and industrialization There are plenty of potential sources to make investment Therefore, it is really challenging for any investment institutions to decide where to put funds on PetroVietnam Finance Corporation under the control of Vietnam National Oil and Gas Group is one of the leading investment institutions Strategic development of the petroleum industry from 2015 to 2025 will quickly make PetroVietnam Finance Corporation or PVFC the most essential Industry-Finance-Commerce Group, which completely develops activities in domestic and abroad With the prestige and scale of PVFC, it can approach various sources of fund with large volume, specifically capital investment, equity and also various trust funds It also helps PVFC a great deal in diversification on the capital market and always gets funds from an available source even when market is bad Nevertheless, in the current context of economic integration and Vietnamese economies in general, the investment climate in has many opportunities as well as challenges In detail, for the securities market of Vietnam, securities investment also faces a greater challenge In addition, the problem of managing capital is also worth mentioning Therefore, to manage portfolio and capital effectively as well as archive strategic goals of PVFC in the finance sector is extremely important Repurchase agreement transaction is one of the most developed investment activities of PVFC due to its benefit to the investor and the Corporation However, some limitations and risks still present along with the systematic risks associated with securities On financial markets, this kind of transaction is developing and plays an important role as in the way that investors can be more active and flexible in choosing the tools to participate the market Instructor: Bui Huy Nhuong, PhD Student: Dam Thi Thu Trang – Advanced Finance 48 Eventually, after taking careful consideration about the usage of repurchase agreement, I’ve chosen “The situation of repurchase agreement procedure at PetroVietnam Finance Corporation and recommendation for future development” as my graduation thesis Research objectives: Research objectives of thesis are reflecting the current situation of procedure of repurchase agreement operation at PVFC and giving some recommendation and improvement for PetroVietnam Finance Corporation The three main points include: • Gathering knowledge and analyzing the current situation of procedure of repurchase agreement operation, such as: how a repo contract be formed and how it works during the time of contract and when it matured • Evaluating the current procedure of repurchase agreement operation at the PVFC which clearly states which are the achievement and the limitation which could be improved • Recommendations for future development of repurchase agreement operation Research methodology: In order to answer the research questions, secondary data will be mostly used in the report such as: PVFC annual report of the most recent five years, PVFC prospects and repurchase agreement of PVFC Besides, some securities textbooks and Internet material will also be used Research scope: Due to the limitation of time, this thesis only focuses on researching on repurchase agreement operation in the near future Instructor: Bui Huy Nhuong, PhD Student: Dam Thi Thu Trang – Advanced Finance 48 Research structure: The thesis will be divided into three chapters: • Chapter one: Theoretical framework • Chapter two: Current situation of repurchase agreement procedure at PetroVietnam Finance Corporation, Ho Chi Minh City Branch • Chapter three: Enhancing the repurchase agreement procedure of PVFC Instructor: Bui Huy Nhuong, PhD Student: Dam Thi Thu Trang – Advanced Finance 48 CHAPTER 1: THEORETICAL FRAMEWORK 1.1 Securities trading 1.1.1 Concept of securities trading: Securities is evidence confirming the rights and legitimate interests of owners of property or capital of the issuer Securities expressed in the form of certificates, book-entry or electronic data Another definition of securities is a means of agreement and may be replaced, representing a financial value Trading securities is the act of buying and selling securities with the intention of making a quick profit Brokerage firms and investment advisers recommend buying securities for the anticipated long-term appreciation of the company Trading securities involve the same stocks and bonds available to all investors on public exchanges The difference is trading securities are timed by investors to buy low and sell high in short time frames While all securities can be traded in this way, some securities have a natural ebb and flow that can be traded more regularly 1.1.2 Risks incurring in securities trading Bankruptcy risk When a company goes bankruptcy, the value of the company's shares plummet and even go default Business risk Your shares will naturally lose value if the status of the company's business is not favorable When there are changes in this situation, companies may be declining profits and dividends Business risks have two basic types: external and internal Internal business risk arises from operational activities of the company Each company has a different internal risk and level of success of each company expressed through performance Instructor: Bui Huy Nhuong, PhD Student: Dam Thi Thu Trang – Advanced Finance 48 CHAPTER 3: ENHANCING THE REPURCHASE AGREEMENT PROCEDURE AT PVFC 3.1 Orientation for future development of PetroVietnam Finance Corporation Investment activities especially repurchase agreement in 2009 of PVFC had a positive change: structure and quality of portfolio improved, which gradually reduce the dependence on market fluctuations Income ratio in fixed income is gradually improving through bonds and securities investment The balance of bond investment rose from 505 billion at the end of 2008 to 1961 billion at the time of December 31 st, 2009 In 2010, the forecasting of the world economy is continuing to be highly volatile Vietnam's economy basically is in recovery process, but at a low speed Many risks, new challenges slow down the recovery speed The government identified economic growth at 6.5% and inflation below 7% The credit institution is faced with risks and difficulties due to the influence of the implications from 2008-2009 The financial market is expected to continue to be in trouble According to the previous forecast, PVFC set targets for 2010 are restructuring operations, improving the quality of operations, and profit before taxes of 620 billion, 7% dividend rate In financial market conditions, despite the unfavorable currency changes, the board of director of PVFC will try to ensure the operation of the corporation in safe and profitable In detail for investment activities: • Continue to restructure the portfolio to reduce its dependence on fluctuations of the market: portfolio restructure by increasing the fixed-income group, good liquidity and reducing the proportion of risky investment • Develop the investments capable of creating mutations through merger and acquisition activity and business investment projects Group oriented energy sector is dominant - minerals - infrastructure, industry groups and real estate, consumer products, transportation, telecommunications and healthcare • Gradually reduce the size of the package of short-term trading securities through each quarter and change management packages of short-term trading in the direction of oriented management, investment strategies, and investment limit For example: licensing transactions and quarterly performance reviews of individual specialists • Strengthen the investment manager with the construction program to access the company’s investment analysis report every six months 3.2 Solution for PetroVietnam Finance Corporation 3.2.1 Using fundamental analysis to make assessment of securities: Besides the current method of assessing stock price, the author suggests another way Fundamental analysis is the analysis of financial condition and business situation of the company based on financial statements, management capability, competitive advantage, competitors and market shares of the company to consider nature, the company's quality as well as the development of the company over time, thus, predicting the changes in stock prices Value is the main goal of fundamental analysis Fundamental analysis will assess the value of securities or the current value This would confirm the real value of a company with close ties to how the financial characteristics such as availability energy development, the risks that the company may encounter, cash flow and so on Any deviation from any real value is also a sign that stocks are undervalued or overvalued Therefore, analysts often see it as a guideline for investment decisions in the future Fundamental analysis is to analyze the basic elements of businesses Those are profit, revenue, capital and assets; meaning analysis of the factors that influence and present business situation of enterprises These factors are usually divided into two categories: quality and quantity o The quality factor is intangible as brand, people, performance and business, management, science and technology o Other factors include the amount of economic indicators of business revenue, profits, capital, etc Analysis cannot say the amount or quality is better and more precise to assess stocks These methods complement each other and complete the picture of the company Fundamental analysis is the cornerstone investors should be buying stocks because it will determine the priority of the Vietnamese companies than other companies In addition, many investors use fundamental analysis method to buy good prospect but underestimated stocks, which is a valuable investment However, fundamental analysis is not usually the inexperienced investor attention because it is difficult, requires experience and knowledge At Vietnam's stock market, most investors are lack of knowledge about business and investment; primarily invest according to the crowd psychology According to the Department of Finance Banking, Foreign Trade University, investment by the crowd as "animal spirit" caused 90% of new investors suffered losses and withdraw in a short time Only 10% of investors are knowledgeable, dedicated and consistent with its investment strategy is successful and can accompany with the trend of market Investors' decisions not only affect their own property, but also the overall impact to the market, especially psychological panic, fled In the worst case, it is them who make the market collapse When fundamental analysis becomes common knowledge of all investors, the stock market will work more effective, continuous involvement of institutional investors that share prices posted a more rational, informed information from listed companies create immediate reaction to the stock price, investors paid more attention to production and business of the enterprises and other information found on the market The main notes in fundamental analysis • Business Scope Enterprises (companies) that are producing show the proportion of the turnover and profitability of the product revenue and profitability of businesses Having knowledge of the business of the company helps investors have a clearer view of the effects can impact businesses such as macroeconomic environment, legislation, natural disasters, competitors and so on • Capital and capital structure o The structure of ownership: the proportion of government held; strategic shareholders, shareholder organizations and individuals hold large amounts, shares in circulation, the stock transfer restrictions Usually, a stock with multiple shareholders illustrates a good strategy in the long term and high expectations of investors In addition, in the case of the company with ownership percentage of the government and major strategic shareholders, the shares are traded on the market less than the total number of shares This often benefits the stock price because the supply is limited o Equity, capital surplus and profits: if an enterprise is making profit and the current debt ratio is high, they will probably raise capital to reduce borrowing costs Moreover, if companies have equity larger than the capital, it's easy to make EPS indicator higher o The capital of the enterprise: to find out the current capital and needs in the future Because in Vietnam, is the fact that both before and after the capital increase, the companies stock prices often fluctuate quite strong • Board of Directors, Board of Directors, Supervisory Board o Board of Directors, including those who, their rate of contributions; out a strategy for the benefit of shareholders, whether there is discrimination between shareholders and the organization of small shareholders o Number of shares held by board members, Board of Directors, Supervisory Board and the people involved, if the number of shares held by the larger it is clear that they have put their faith in the ability of the neck growth votes and that is a good sign When they sell in large numbers is often a signal that bad • Financial indicators Financial indicators include: net revenue, profit, ROA, ROE, EPS, P/E, debt structure and financial leverage, dividends and dividend policy Investors need to compare them with other businesses and the average of the industry to clearly see the advantages and disadvantages of business Investors should build their own worksheet of the financial indicator of industry groups to know deeper and more comprehensive • Brand, products and delivery systems In fact, companies with brand, product reputation in the market and good distribution systems and services has stock price higher than common ground Some companies build a reputation on domestic and foreign markets; have strategic oversea partners which make their stock price stability and sustainable growth than smaller companies without brand and reputation • Transactions of foreign investors and large institutions Foreign investors often buy stocks that have growth potential in the long term, as well as domestic organizations and individuals remained generally static observation for foreign investors The short-term investment in stocks that subject to long-term investments has a feeling of less risk, especially when foreign institutions hold large quantities and are continuing to buy more 3.2.2 Valuation of securities Besides common ways of securities valuation, PVFC can uses many other ways to value the securities in order to make an objective view and better decision Some suggested valuation: Discounted cash flow: In finance, discounted cash flow (DCF) analysis is a method of valuing securities using the concepts of the time value of money All future cash flows are estimated and discounted to give their present values (PVs) – the sum of all future cash flows, both incoming and outgoing, is the net present value (NPV), which is taken as the value or price of the cash flows in question Using DCF analysis to compute the NPV takes as input cash flows and a discount rate and gives as output a price; the opposite process – taking cash flows and a price and inferring a discount rate, is called the yield Discount rate: The most widely used method of discounting is exponential discounting, which values future cash flows as "how much money would have to be invested currently, at a given rate of return, to yield the cash flow in future" Other methods of discounting, such as hyperbolic discounting, are studied in academia and said to reflect intuitive decision-making, but are not generally used in industry The discount rate used is generally the appropriate weighted average cost of capital (WACC) that reflects the risk of the cash flows The discount rate reflects two things: The time value of money (risk-free rate) – according to the theory of time preference, investors would rather have cash immediately than having to wait and must therefore be compensated by paying for the delay The discount rate reflects two things: • A risk premium – reflects the extra return investors demand because they want to be compensated for the risk that the cash flow might not materialize after all • An alternative to including the risk in the discount rate is to use the risk free rate, but multiply the future cash flows by the estimated probability that they will occur (the success rate) This method, widely used in drug development, is referred to as rNPV (risk-adjusted NPV), and similar methods are used to incorporate credit risk in the probability model of CDS valuation Discrete cash flows The discounted cash flow formula is derived from the future value formula for calculating the time value of money and compounding returns Thus the discounted present value (for one cash flow in one future period) is expressed as: where • DPV is the discounted present value of the future cash flow (FV), or FV adjusted for the delay in receipt; • FV is the nominal value of a cash flow amount in a future period; • i is the interest rate, which reflects the cost of tying up capital and may also allow for the risk that the payment may not be received in full; • d is the discount rate, which is i/(1+i), i.e the interest rate expressed as a deduction at the beginning of the year instead of an addition at the end of the year; • n is the time in years before the future cash flow occurs Where multiple cash flows in multiple time periods are discounted, it is necessary to sum them as follows: for each future cash flow (FV) at any time period (t) in years from the present time, summed over all time periods The sum can then be used as a net present value figure If the amount to be paid at time (now) for all the future cash flows is known, then that amount can be substituted for DPV and the equation can be solved for i, that is the internal rate of return All the above assumes that the interest rate remains constant throughout the whole period Continuous cash flows For continuous cash flows, the summation in the above formula is replaced by integration: where FV(t) is now the rate of cash flow, and λ = log(1+i) Free Cash Flow For The Firm: A measure of financial performance that expresses the net amount of cash that is generated for the firm, consisting of expenses, taxes and changes in net working capital and investments, calculated as: FCFF = Operating cash flow – Expenses – Taxes – Changes in NWC – Changes in Investment This is a measurement of a company's profitability after all expenses and reinvestments It's one of the many benchmarks used to compare and analyze financial health A positive value would indicate that the firm has cash left after expenses A negative value, on the other hand, would indicate that the firm has not generated enough revenue to cover its costs and investment activities In that instance, an investor should dig deeper to assess why this is happening - it could be a sign that the company may have some deeper problems Free Cash Flow To Equity - FCFE This is a measure of how much cash can be paid to the equity shareholders of the company after all expenses, reinvestment and debt repayment Calculated as: FCFE = Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment Analysts often use FCFE in an attempt to determine the value of a company This alternative method of valuation gained popularity as the dividend discount model's usefulness became increasingly questionable 3.3 Recommendation 3.3.1 Recommendation to State Securities Commission Repo transaction provides funds for investors as well as maintains the assets of investors may want to sell Repo is one of the services necessary to support the stock market because investors have more financial leverage and the Securities have extended the service conditions The biggest risk of this business is the price fluctuations and credit of the borrower Moreover, there is no such thing as specific provisions so each securities company has different way of executing repo transaction In the case of EVS Securities Company, investors can transfer all or a portion of the securities with the repo contract, all rights arising out of repo securities in time of contract still belong to the customer Process to make a repo agreement are as follows: investors see the stock list of EVS repo, then contact the repo department to determine the terms, limits and signing contracts The next step is the implementation of the transfer of securities to EVS under repo contracts signed and the EVS will be disbursed If required, contact EVS’s investors to liquidate the contract requirements, before the term acquired or transferred to third party In other case of Saigon – Hanoi Securities Company (SHS), the deployment of repo began in December of 2008 Accordingly, the repo rates in the SHS does not exceed 40% of the market trading price of shares (as assessed by SHS), and not exceed two times the par value of such shares Equity portfolio of SHS repo includes bank stocks, such as Military Bank, Eximbank, Bao Viet Group, Habeco, Sabeco and term repo maximum of months At the Petroleum Securities Company (PVS), repo service only applies to bank shares such as MB, Eximbank With these shares, PVS implements repo with high volume (minimum 20,000 shares) at par value If the stock price decreases, PVS will require investors to pay additional security properties As observed above, repo is an useful transaction but still has limitation in the process of implementing Therefore, the role of State Securities Commission is very important When performing this operation, it is needed to have written guidance of the SSC SSC should be prescribed on repo rates, risk management processes, contract terms so that there is such current inconsistent The existence of repo operations on a large scale is a real need The SSC should clearly define what is repo and guide the process of implementing 3.3.2 Recommendation to government 3.3.2.1 Better implementation of auditing process To help the investment institution in approving customers’ repo transaction accurately, the financial statements of the customers and the issuing unit of securities must reflect the real situation Also, the corporation’s information collection must proceed smoothly and comprehensively The Government need to promulgate financial and business accounting regulations to strengthen the legal effect, ensure uniformity and standards of the accounting operation, allowing the investor to make precise conclusions about the business operational situation of the enterprises To improve the efficiency of the audit operation, the immediate need is to have an agreement among the audit agencies in Vietnam and specifying the audit standards to conform to the rules of international audit 3.3.2.2 Supporting SSC in the information collecting operation and regulating the repo operation Information collecting is one of the most important steps in the repo transaction and the quality of repo contract Investment institution can easily assess securities based on the business performance of the issuing company, therefore it is the Government’s duty to help banks in getting the information that they need The Government can create new legal framework supporting companies’ task of collecting information, so that the information the company gets will be more transparent, more accurate such as: o Demanding the enterprises to have their financial statements audited every year o Promoting the operations of repurchase agreement in Vietnam o Improving the relationship between corporation and Government agencies 3.3.2.3 Standardize the legal framework Repurchase agreement should be continuously developed in ways of expanding the legal framework for outward investments, inheriting and developing the established a better liquidation for the market As for current transactions, legal improvement needs to be kept improving in order to: o Create a complete and standard repo procedure and diversify scope of repo contract supply services of corporation o Develop specific and adequate regulations as legal foundation with the aim of gradually putting operations of repurchase agreement units in order and meeting the demand of individuals and organizations o Attach responsibilities of repo institutions in supervision, inspection and safety assurance to their operations, and enhance management role of the SSC 3.3.2.4.Controlling the fluctuation of interest rate: The fluctuation of interest rate directly affects the operation of repurchase agreement The repo rate of PVFC is considerably high among the general investment climate Therefore, it is needed to control the interest rate, which creates a stable environment and make competitive advantage for investment institutions It is the fact that in Vietnam is that the interest rate market is dominated by the regulations and administrative orders from the state bank The adjustment from the state bank is often imposed on markets to deal with the current difficulties in the economy Because these policies are always behind the fluctuation of the market, they not only always bring the desired effect as the state bank’s expectation and also lead to the improper supply and demand policies Therefore, policy makers and market regulatory authorities need to run flexible and prudent in executing monetary policy and interest rates to make a stable macroeconomic environment, effectively control the inflation The Government also should make sure to capture, analyze and evaluate in time the evolution of financial market to react to the rapid changes of market, thereby, predict changes in economic conditions to serve effectively for the management of SBV CONCLUSION In financial market, repurchase agreement is one of the most developing investment activities Therefore, reservation and development of repurchase agreement transaction is necessary as the importance of investment institutions in financial market is increasing The thesis has make some accomplishments as following: • The thesis gives knowledge of securities market and securities investment activities in Vietnam, especially repurchase agreement • The thesis also analyze of the real situation of repurchase agreement’s process at PVFC and its application in order to give the assessment of repurchase agreement executing process at PVFC that clarifies the achievement and limitation • In accordance with the assessment, the thesis ends with giving some solutions for better development of repurchase agreement procedure and recommendation for the Government and SSC Eventually, the author has tried her best to give the most general and useful information about repurchase agreement activities as well as make some suggestions for future development of this transaction Nevertheless, the thesis cannot avoid limitations and mistakes due to the lack of information and time Last but not least, it is the author’s honor to receive any adjustments and comments The author is also more than willing to discuss and further research about this topic with anyone who is interested in order to give a better report in the future REFERENCES Vietnamese: • Bản cáo bạch PVFC 2008 • Báo cáo thường niên 2009 2010 • Báo cáo tài chínhVietinbank từ 2007 đến 2010 English: • Frank K.Reilly and Keith C.Brown – Investment Analysis and Portfolio Management – Seventh Edition, Thomson South – Western • Zvi Bodie, Alex Kane and Alan J.Marcus – Essentials of Investment – Sixth Edition, McGraw Hill Website: • www.cafef.vn • www.investopedia.com • www.wikipedia.com SUPERVISOR JUDMENT CRITIC EVALUATION ... consideration about the usage of repurchase agreement, I’ve chosen The situation of repurchase agreement procedure at PetroVietnam Finance Corporation and recommendation for future development ... graduation thesis Research objectives: Research objectives of thesis are reflecting the current situation of procedure of repurchase agreement operation at PVFC and giving some recommendation and. .. improvement for PetroVietnam Finance Corporation The three main points include: • Gathering knowledge and analyzing the current situation of procedure of repurchase agreement operation, such