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Financial activities of industrial enterprises on the stock market in Vietnam - 1


MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITY


NGUYEN THI LOAN

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FINANCIAL ACTIVITIES

OF INDUSTRIAL ENTERPRISES ON THE STOCK MARKET IN VIETNAM


Major: Industrial Economics

Code : 62.31.09.01


DOCTORAL THESIS IN ECONOMICS


Scientific instructor:

1. Associate Professor, Dr. Ngo Kim Thanh

2. Dr. Nguyen Son


HANOI, 2009


COMMITMENT

I hereby certify that this thesis is my own research work. The data and research results mentioned in the thesis are honest and have clear sources.


Hanoi, December 6, 2009 The person who pledged


Nguyen Thi Loan


Cover Page Pledge TABLE OF CONTENTS

INDEX


Page

List of symbols, abbreviations List of tables

Image Catalog

INTRODUCTION 1

1. Urgency of thesis topic 1

2. Overview of research situation 2

3. Research purpose of the thesis 8

4. Research object and scope 8

5. Research methods 8

6. Proposals and contributions of the thesis 9

7. Structure of the thesis 10

Chapter 1 - BASIC ISSUES OF THE STOCK MARKET AND FINANCIAL ACTIVITIES OF INDUSTRIAL ENTERPRISES ON THE STOCK MARKET 11

1.1. Overview of the stock market 11

1.1.1. Concept of stock market 11

1.1.2. Classification of stock market 13

1.1.2.1. Classification by goods 13

1.1.2.2. Classification according to capital circulation process 14

1.1.2.3. Classification by market organization form 15

1.1.3. The role of the stock market 15

1.1.4. Subjects participating in the stock market 18

1.1.4.1. Government 18

1.1.4.2. Publisher 19

1.1.4.3. Investor 19

1.1.4.4. Financial intermediaries 19

1.1.5. Basic activities of the stock market 20

1.1.5.1. Primary market activities 20

1.1.5.2. Secondary market activities 20

1.2. Overview of financial activities of enterprises on the stock market 22

1.2.1. Industrial enterprises and the role of industrial enterprises 22

1.2.1.1. Concept of industrial enterprise 22

1.2.1.2. Types of industrial enterprises 24

1.2.1.3. The role of industrial enterprises 25

1.2.2. Financial activities of industrial enterprises on the stock market 27

1.2.2.1. Securities issuance activities 28

1.2.2.2. Dividend and bond payment activities 47

1.2.2.3. Securities investment and trading activities 49

1.2.3. The nature of financial activities of industrial enterprises on the stock market 52

1.2.4. Impact of financial activities on industrial enterprises on the stock market in Vietnam 54

1.2.4.1. Positive impacts 54

1.2.4.2. Negative impacts 56

1.3. Factors promoting financial activities of industrial enterprises on the stock market 58

1.3.1. External factors 58

1.3.1.1. Legal framework 58

1.3.1.2. Government policy 59

1.3.1.3. Concentrated stock market 60

1.3.1.4. Intermediary financial institutions 62

1.3.1.5. Legal consulting organization 63

1.3.1.6. Investment objects 64

1.3.1.7. Other factors 65

1.3.2. Factors within the industrial enterprise itself 67

1.3.2.1. Business strategy of the enterprise 67

1.3.2.2. Business cycle, growth prospects, industry competition and business environment 68

1.3.2.3. Business performance of the issuing organization 70

1.3.2.4. Capacity of the business leadership and management team 71

1.3.2.5. Business reputation 72

1.4. Financial operations experience in the stock market of some large industrial corporations in the world 73

1.4.1. General Motors (GM) Corporation of America 73

1.4.2. China's PetroChina Group 75

1.4.3. Airbus Group of Europe 76

1.4.4. Lessons learned for Vietnamese SMEs 77

Chapter 2 - CURRENT STATUS OF FINANCIAL ACTIVITIES OF INDUSTRIAL ENTERPRISES ON THE STOCK MARKET IN VIETNAM 80

2.1. Current status of formation and development of stock market 80

2.1.1. Current status of the system of legal documents for stock market activities in Vietnam 80

2.1.2. Current status of goods in the stock market concentrated in Vietnam 81

2.1.2.1. Stock market 81

2.1.2.2 Bond and fund certificate market 84

2.1.3. Current status of securities trading activities 86

2.1.3.1. Trading activities at Ho Chi Minh City Stock Exchange 86

2.1.3.2. Securities trading activities at Hanoi Stock Exchange 91

2.1.3.3. Trading activities on the OTC decentralized market 93

2.1.3.4. Trading activities on Upcom market 95

2.1.4. Current status of operations of intermediary organizations and other supporting activities 97

2.1.4.1. Securities Company 97

2.1.4.2. Fund management company and securities investment fund 98

2.1.4.3. Depository, registration and clearing activities 100

2.1.4.4. Auditing activities 100

2.1.4.5. Market management, inspection and supervision activities 101

2.1.5. Evaluation of the development of Vietnam's stock market in recent times 101

2.2. Current status of financial activities of enterprises on the stock market in Vietnam...103

2.2.1. Overview of Vietnamese enterprises and the equitization process of Vietnamese enterprises 103

2.2.1.1. Overview of Vietnamese industrial enterprises 103

2.2.1.2. The process of equitization of Vietnamese industrial enterprises 106

2.2.2. Current status of financial activities of industrial enterprises on the stock market in Vietnam 109

2.2.2.1. Current status of valuation methods and enterprise value when issuing shares to the public 109

2.2.2.2. Current status of securities issuance activities 115

2.2.2.3. Current status of dividend and bond payment activities 133

2.2.2.4. Current status of securities investment and trading activities 137

2.2.3. Evaluation of financial performance of enterprises on the stock market in Vietnam...143

2.2.3.1 General SWOT assessment on the stock market of DNCN 143

2.2.3.2 Evaluation of financial performance of industrial enterprises on the stock market in Vietnam 144

Chapter 3 - SOLUTIONS TO PROMOTE FINANCIAL ACTIVITIES OF INDUSTRIAL ENTERPRISES ON THE STOCK MARKET IN VIETNAM 172

3.1. Development orientation of Vietnamese industrial enterprises to 2020 172

3.2. Solutions to promote financial activities of industrial enterprises on the stock market in Vietnam 176

3.2.1. Solutions for industrial enterprises 176

3.2.1.1. Solutions to improve the quality of business valuation when issuing shares to the public 176

3.2.1.2. Solutions for building effective stock issuance plans 179

3.2.1.3. Solutions to build an effective dividend payment method 181

3.2.1.4. Solutions to improve transparency of business information 182

3.2.1.5. Solutions for diversifying capital mobilization forms through the stock market 184

3.2.1.6. Solutions for stock market research and stock information exploitation 185

3.2.1.7. Research solution to establish a professional securities investment department and build an optimal investment portfolio 187

3.2.1.8. Solutions for training a team of professional securities investment and trading staff 193

3.2.1.9. Solutions to improve business management capacity and level 194

3.2.1.10. Information technology investment solutions for securities trading activities in industrial enterprises 196

3.2.1.11 Risk management solutions when industrial enterprises participate in the stock market 197

3.2.2. Solutions for developing the stock market in Vietnam 199

3.2.2.1. Solutions to perfect the legal framework related to the stock market on the threshold of the stock market recession 199

3.2.2.2. Solutions to stabilize the stock market in the face of domestic economic recession 203

3.2.2.3. Solutions for creating goods on the stock market 204

3.2.2.4. Solutions for developing business organizations and supporting the market 206

3.2.2.5. Solutions to develop insurance forms for securities companies.

................................................................ ................................................................ ..........................211

3.2.2.6. Solutions for developing credit rating organizations 212

3.2.2.7. Solutions for developing derivative securities market products.

................................................................ ................................................................ ..........................214

3.3. Recommendations and proposals 218

3.3.1. Recommendations to the Government 218

3.3.2. Recommendations to Ministries, Branches, Local Authorities and Functional Management Agencies 220

3.3.3. For businesses 222

LIST OF PUBLISHED WORKS BY THE AUTHOR LIST OF REFERENCES

APPENDIX 1

APPENDIX 2

LIST OF SYMBOLS AND ABBREVIATIONS


Stock market: Stock market

DNCN: Industrial enterprise

OTC : Decentralized

SGDCK OTC: Decentralized securities trading market UBCKNN: State Securities Commission

Ho Chi Minh City Stock Exchange

: Ho Chi Minh City Stock Exchange

SGDCK: Stock Exchange SGDCKHN: Hanoi Stock Exchange TTLKCK: Securities Depository Center DNS: State-owned Enterprise

NASDAQ : US Over-the-Counter Stock Market CPH : Equitization

CP : Shares

DMTN: Credit rating

TCTC: Financial institution


LIST OF TABLES

Table 1: GM's financial situation in the last 3 years

Table 2: Financial situation of Petro China in the last 3 years Table 3: Financial situation of Airbur China in the last 3 years

Table 4: Equitization situation of Vietnamese enterprises according to state capital scale

Table 5: Revenue of 100 joint stock companies

Table 6: Profits of 100 industrial enterprises

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