How Securities Are Issued in Vietnam

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| Spring 2011|
| Group 2_BA09 Spring 2011
|

[Financial management seminar report]|
|
Tutor: Nguyen Xuan Truong
Students:
Nguyen Thuy Trang
Tran Minh Quan
Duong Quoc Dat
Dao Manh Cuong
Nguyen Thi Lan Anh
Vu Tien Dung
Nghiem Xuan Duc Thien
Nghiem Xuan Bach

Table of Contents
I.Types of securities in Vietnam capital market2
II.Participants in Vietnam securities market2
III.How securities are issued2
1.Private placement2
1.1 Definition2
1.2 How Private Placements work3
1.3 Private Placements in Vietnam3
2.Initial public offering3
2.1 Definition3
2.2 Underwriting4
2.3 Auction4
2.4 IPO in Vietnam4
IV.Apendix5
1.Reference5
2. Theory review of stock and bond7
2.1 Stock and its types7
2.2 Vietnam stock market overview8
2.3 Bond8
2.4 Bond in Vietnam securities market8
3. Theory review of role of bank and securities companies9
3.1 Bank9
3.2 Securities Company9
4. Some companies that have the underwriting services in Vietnam10
5. Types of auction10
6. Case: Unreasonably high price of Vietcombank stock.11
7. Answer for Q&A part11
8. Sefl assestment12

I. Types of securities in Vietnam capital market

According to decree 144.2003.ND-CP, securities mean any certificates or book entries representing a securities holder’s legitimate rights and interests towards an issuer's assets or capital. It includes stocks, bonds, investment units and other kinds of securities as stipulated by law. The two most notable ones are stock and bond. For theory review of stock and bond as well as their features in Vietnam, please refer to the appendix part, page 7. II. Participants in Vietnam securities market

Participants of a securities market usually consist of bank, Securities Company, insurance company, individuals, credit unions, pension funds, mutual funds, savings and loan association, and mutual savings bank. However, among the most outstanding ones in Vietnam are bank and Securities Company. For theory review of role of bank and Securities Company, please refer to the appendix part, page 9 & 10) To illustrate the role of a securities company, we take Saigon Securities Incorporation (SSI) as an example. SSI was founded in 1999. At that time, they just provided 2 services: brokerage and advisory service. However, from June 2005 they provide 6 services (Underwriting, Depositary Receipt, Portfolio Management and Self-investment were added). According to financial statement of SSI in 2010, nearly 160 million securities units were traded by SSI (market player role) and over 2,484 million securities units were traded by investors through SSI (market intermediaries role). In term of profit, SSI gained over 176 billion VND from advisory service, 13 billion VND from underwriting and over 710 billion VND from financial investment. III. How securities are issued

There are many types of securities each of which has its own way to be issued. However, due to our limitation, we just focus on how stock is issued. For more information about how bond is issued, please refer to appendix part page 11. There are two measures of issuing stock in the primary market: private placement (PP) and Initial public offering (IPO). 1. Private placement

1.1 Definition
Private placement is the act of selling securities to a very limited number of well-chosen investors. These investors are typically the most accredited individuals or the most prestigious and prosperous financial institutions that meet certain demanding eligibility requirements, rather than the general public. Furthermore, the sales of securities through private placements cannot involve any public advertising. Private placement, in contrary to IPO, is more suitable for fledging companies which are new to the market and not ready to become publicly-traded, yet still has the need to raise a large sum of capital in a short period of time....
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