Mobilizing capital of enterprises on securities market of vietnam

FOREWORDS

1. The necessity of the thesis
In order to reach the target of becoming an industrialized and modern oriented
country in 2020, strongly developing in the successive years, the development of a
system of enterprises plays an important role. Vietnam securities market is established
and developed with the purpose of creating an important fund mobilization channel for
the economy and enterprises, which is a key step making contribution to enhance the
socialism oriented market economy in Vietnam.
After 12 years operation, Vietnam securities market basically has formed itself as
a fund mobilization channel for the economy in addition to traditionalbank channel,
making worthy contribution to equitization and increase of state owned enterprises’
efficiency. However, during the past time, under the fluctuation of securities market,
fund mobilization of enterprises has met difficulties due to small scope and simple
methods which results to limited achievements.
With the topic “The fund mobilization of enterprises in Vietnam securities
market”, the author would like to propose scientifically and realistically based solutions
to partially contribute to solve the above mentioned problems.
2. Research purposes, objects and scope
The purposes of the thesis are as follows:
- Systemize the theory about fund mobilization of enterprises in Vietnam
securities market.
- Analyse the status of fund mobilization of enterprises in Vietnam securities
market.
- Propose a system of solutions to force the fund mobilization of enterprises in
Vietnam securities market.
Research object: The fund mobilization of enterprises in Vietnam securities
market
Research scope: The fund mobilization of enterprises in Vietnam securities
market during the period of 2010 - 2012
3. Research methods

Research methods used in the thesis include: dialectical materialism,
comparisonism, systematically issue collection, inductive reasoning. The thesis also


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uses interview and study (via sending inquiries to relating people/enterprises) methods
to get information for clarificatin of research object.
4. The scientific and realistic significances of the thesis
- The thesis proposes a new approach to the fund mobilization of enterprises in
securities market: promoting the fund mobilization must be closely tailored to the
efficiency of fund utilization, considering this as an important factor creating
sustainability in the fund mobilization activities; simulating the fund mobilization
process of enterprises in securities market; clarifying the role of 3 important entities:
(1) Buyers including organizational and individual investors; (2) Seller as
organizational issuer; (3) intermediaries as securities companies.
- The thesis rigorously analyzes and systemizes the factors that affect thefund
mobilization of enterprises in Vietnam securities market. Then applying theories,
analysis on the role and affecting measures of each factor to propose solutions to
facilitate the fund mobiliaztion process of enterprises, confiming this as an important
fund mobilization channel of the economy.
- The research results help to closely connect enterprises and investors in terms
of fund mobilization, surmounting obstacles in the fund mobilization process of
enterprises. The thesis also helps to create direction for secrurities companies’
operation so that they can promote their roles in the market, together with ensuring the
business efficiency and risk controlling when taking part in the fund mobilization
process. For market regulatory authorities, the thesis has proposals to enhance their role
of creating market, ensuring an equally, clearly, publicly and effectively operated
market.
5. Introduction of the thesis structure
The name of the thesis: “The fund mobilization of enterprises in Vietnam

securities market”.
Besides the Introduction and Conclusion, The thesis includes 3 chapters:
- Chapter I: General theory of the fund mobilization of enterprises in Vietnam
securities market.
- Chapter 2: The status of the fund mobilization of enterprises in Vietnam
securities market
- Chapter 3: Solutions to promoting the fund mobilization of enterprises in
Vietnam securities market.


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CHAPTER I
GENERAL THEORY OF FUND MOBILIZATION OF ENTERPRISES IN
SECURITIES MARKET
1.1. OVERVIEW OF SECURITIES MARKET
1.1.1. History of establishment and development of securities market
- The securities market has hundreds of years history and has confirmed the
indispensable role in the market oriented economies. The development process of
securities market has witnessed the fluctuations, but after overcoming crises, it has been
restored and continued to develop.
1.1.2. Definition and nature of securities market
- Securities market is the place where transactions of selling, buying, exchanging
securities take place. The nature of securities market is that it shows the connection
between the demand and supply of investment capital at which the stock price contains
information of capital cost or price of investment capital cost. Securities market is the
high level development of commodity production and circulation.
1.1.3. Position and structure of securities market
1.1.3.1 The positon of securities market in financial market
- Securities market is a part and also the center of financial market where the
issuance and exchange of capital and loan instruments take place.

1.1.3.2.The structure of securities market
- We can analyze 3 basic dimensions of the structure of securities market, they
are: commodity categorization, organizational type of market and capital rotation.
- According to the commodity categorization dimension: bond market, share
market and market for derivatives
- According to the organizational type of market: Stock Exchange, Over the
counter market.
- According to capital rotation: Primary market, secondary market. These 2
markets have close supportive relation.



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1.1.4. Entities in securities market
1.1.4.1. Issuer
- Government and local authorities;
- Companies which issue shares and bonds of themselves;
- Financial organizations.
1.1.4.2. Investors
- Individual anh households investor;
- Organizational investors: investment institutions, commercial banks, securities
companies, investment companies, insurance companies, mutual funds, pension funds,
social insurance funds
1.1.4.3. Secutires market related organizations
- Securities market supervisors and regulators;
- Stock Exchange;
- Associatiion ofSecurities investors;
- Organization of securities depository and clearance;
- Supportive organizations;
- Rating agencies.

1.1.5. The role of securities market
- Centralizing and distributing capital, restructuring the period of capital in order
to meet the demand of economic development.
- Making contribution to more equal fund re-allocation.
- Creating conditions for separating the ownership and management of
enterprises.
- Allowing enterprises to mobilize international capital at lower costs.
- Creating conditions for government to mobilize financial resources.
- Making contribution to future business period forcast
The securities market also have some negative effects. Information sometimes is
not transmitted to investors with full value which results in the fact that the stock price
does not reflect the real ecnonomic value of the enterprise, which is not reliable for
effective allocation of resources.


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1.2. METHODS OF FUND MOBILIZATION OF ENTERPRISES IN
SECURITIES MARKET.
1.2.1. Enterprises’s channels of fund mobilization and features of securities
market channel.
- Operative capital of enterpries consists of: ownership capital, loans from banks,
leasing capital, securities market based capital (through publicly issuing securities)
- Features of securities market based capital: Actively, timely, meeting the
demand of the time length of the investment projects; high value amount of fund
mobilized, low cost of mobilization. However, the capital mobilization procedure is
relatively complicated, requiring high credibility of enterprises and operating through
financial intermediaries.
1.2.2. Methods of enterprises in fund mobilization in securities market
1.2.2.1. Securities Offering
- Individual offering:Securities are offered to limited investors (normally

organizational investors), with special conditions and not for the whole public.
- Public offering: Securities are offered to the public, in which a certain
propotion of securities is offered to small investors. This includes Initial Public
Offering (IPO) and Primary Public Offering (PPO)
1.2.1.2. State regulation on securities offering
- The target is to ensure the equality for all entities participating in the market, to
ensure all resources mobilized in the market used most effectively for the economy.
Currently there are 2 regulation measures towards primary securities market, they arer
“Full Information Announcement” and “Quality Management”
1.2.1.3. Conditions for IPO
- Quantitative criteria: Scope (mainly relating to captial); business performance,
IPO value, the minimum number of investors, the commitment of initial shareholders to
hold a certain ratio of shares.
- Qualitative criteria: Capability and experiences of corporate management;
organizational structure of the company; the reliability of corporate financial statement;
possible plans of utilizing effectively the capital mobilized from the IPO.
- Securities Issuance Guarantee: The guarantor commits to the offering
organizationsof buying partially or all of the securities offered for re-sale, or buying the
remanings of securities which are not distributed yet of the offering organizations, or


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supporting the offering organizations in distributing securities to the public. The
guarantee includes: best effort underwriting, mini-maxi underwriting, all or none and
stanby underwriting.
1.3. FACTORS AFFECTING THE FUND MOBILIZATION OF
ENTERPRISES IN SECURITIES MARKET.
1.3.1. Factors from the issuer
- Demand for fund mobilization: Scope of capital mobilized, time period
required for capital mobilization.

- Issuance costs: Including issuance guarantee cost, consultancy cost,
advertising, pringting, supervision and listing costs The value of those costs
depends on many factors and it could amount up to 10% of the total value of the
offering.
- Time period for utilizing the capital mobilized: If companies just have demand
of short term capital, they often borrow from banks; if they need captial for medium
and long term projects, the securities issuance method is more appropriate.
- Capital cost: calculated on basis that dividend of old shareholders is not lower.
- The formation of new supervising shareholders: One of main factors most
affecting the company’s choice of capital mobilization method is the corporate
operation supervison.
- The possibility of the success of Fund mobilization in securities market has
connection with investment habit in every country.
- The activeness in production and business: With the capital mobilized in
securities market, companies invest in their projects without investors’ supervision
- Transaction costs in securities market affect investors’ decision on buying
corporate securities.
- Financial leverage: Companies can use financial leverage by: share issuance,
bond issuance, bank loan, use others’ capital and all of them are aimed at capital
mobilization for corporate operation.
- Other factors: Companies’ risks when issuing securities, market factors,
inflation, government’s priority policies in granting credit
1.3.2. Factors from the investor
- Investors will decide to buy securities or other assets of joint stock companies
based on the following factors:


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+ Investors’ economic capacity
+ Expected dividend of corporate securities compared to profit from alternate

assets.
+ Risks attached with corporate securities compared to other alternate assets.
+ The loosening of securities compared to other alternate assets.
1.3.3. Factors from intermediaries
- Issuance consultancy human resource: It is required that they are capable
enough to cooperate with companies to fulfill this important task.
- Financial capacity of securities companies: have strong effect on investment in
issuance consultancy human resource, participation in issuance guarantee, dealing,
distributing and stabilizing the securities prices.
- The capacity of providing brokerage service: help to facilitate the transactions
of investors, increasing the market liquidity.
- Securities company management: Ensure the securities companies’ capability
of performing the role in linking the seller and the buyer.
1.3.4. Other factors
Market authorities and regulators, Stock exchanges, securities depository
center, macro economy, supportive organizations.

CHAPTER 2
REAL STATE OF CAPITAL MOBILIZATION OF ENTERPRISES
IN VIETNAM SECURITIES MARKET
2.1. FORMATION AND DEVELOPMENT OF VIETNAM SECURITIES
MARKET
2.1.1. Formation process of Vietnam securities market
Period of early 1990 to 1999 was a preparation step in order that by 2000,
Vietnam securities market officially operated with event of the first securities
trading session in Ho Chi Minh City Securities Trading Center.
2.1.2. Transaction happening of Vietnam securities market in period of 2000-2012
- Transaction on Ho Chi Minh Stock Exchange (HOSE): HOSE began to operate
since 2000 and by the time of the end of 2012, it implemented 2,675 securities trading

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sessions. By December 31st, 2012, there were 308 stocks, 39 bonds being listed and traded
in HOSE with total listed value reached 258,720 billion dongs.
- Hanoi Stock Exchange (HNX): By December 31
st
, 2012, total companies listing
their stocks on Hanoi Stock Exchange reached 85,536 billion dongs. Operation of Hanoi
Securities Trading Centre concentrates into three major areas: organizing stock auction
for the first time for issuing organizations; organizing bidding and trading public bonds
and bond guaranteed by Government, bonds of local authorities, works bonds.
2.1.3. Some achievements and limitations of Vietnam securities market
- Successfully built and put securities market into operation, contributing
important part to development of enterprises and economics;
- Form a basic legal system for operation of securities market;
- As for trading mode in securities market: there are modification steps, changes
approach to international standards.
- Successfully formed professional supporting organizations supplying services to
securities trading such as payment bank, Securities Depository and securities
companies systems.
- Activities of announcing information, supervision of market have certain
progress in protecting benefit of investors.
Besides some achievements, Vietnam securities market revealed limitations:
-Goods and scale of market is small compared to those in the region.
-Stock market, despite of strong development in scale over the past time, the
efficiency of capital mobilization for enterprises is not high, almost the years was not
exceeded 5% total mobilized capital sources in the economy.
- As for operations of securities companies, fund management companies:
transparence, reliability of these financial intermediates is still much limited.
2.2. REAL STATE OF CAPITAL MOBILIZATION OF ENTERPRISES IN

VIETNAM SECURITIES MARKET
2.2.1. Demand for mobilizing capital of Enterprises in Vietnam securities market
- Ensure financial safety ratio: General data in financial statements as at
December 31
st
, 2012 of 50 leading scale enterprises whose stocks are listed on Hanoi
Securities Stock Exchange and Ho Chi Minh City Securities Exchange showed many
enterprises have high ratio of loan/ owner’s equity required to increase in owner’s
equity in order to improve financial safety.


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- Expansion of business and production: it can be seen from summary, almost
100% enterprises listing their stocks in securities market in order to mobilize capital in
securities market to expand business and production, findings from interview with
some leaders of enterprises listing stock and sending investigation sheet showed
majority of the surveyed enterprises (83.3%) have demand for mobilizing capital in
securities market.
2.2.2. Method of mobilizing capital of enterprises in Vietnam Securities market
* Individual issuance: Offering individual shares is the offering of share or direct
share buying right and not use mass media for one of subjects: professional securities
investor; less than 100 investors not being professional securities investors.
* Public issuance: Offering securities to public is offering of securities in one of
modes: Through mass media, included internet; offering securities to at least 100
investors, excluded professional securities investor; offering to a indefinite quantity of
investors.
* Some typical issuing situations
Cases of issuing stocks for mobilizing capital in securities market of enterprises
over the past time can be classified and summarized as follows:
Case 1: Issuing to existing shareholders with face value

This is the most common issuing case, widely used by many issuing organizations
in reality over the past time due to rather simple implementation.
Case 2: Issuing to existing shareholders with price higher than face value
This case is very common in context of effervescent market; market price is much
higher than face value.
Case 3: Issuing to existing shareholders with price lower than face value
This case happens when stock trading price of the issuing organization in market is
lower than the face value.
Case 4: Issuing to shareholders by new face value
This case happens in event that issuing organization wants to attract additional
capital especially investment fund in condition that securities market is quite.
Case 5: Issuing to new shareholders with price higher than face value
This mode happens commonly in effervescent period of securities market and
create capital surplus for issuing organization. Due to change in the shareholding, it is
required to persuade existing shareholders about benefit of this issuing mode.


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Determination of price for this issuing period is often rather complicated, there
are often 03 common methods: Apply average prices of stock in the most recent
transaction sessions; Apply fixed price in the period of issuing to new shareholders;
Auction of the additionally issued shares.
Case 6: Issuing to new shareholders with price lower than face value
This is a case applied when issuing organization wants to increase capital but
existing shareholder are not willing to invest more capital into enterprises and the stock
price is lower than face value.
Case 7: Issuing to existing shareholders in combination with new shareholders
with price equal face value.
Option of issuing to both existing shareholders and new shareholders in the same
issuing period is also often selected due to its flexibility.

Case 8: Issuing to existing shareholders in combination with new shareholders
with price higher than face value.
With price higher than face value, issuing organization will receive a capital
surplus amount, which may satisfy existing shareholders.
Case 9: Issuing to existing shareholders in combination with new shareholders
with price lower than face value.
In context that market price of stock is lower than face value, business activity of
issuing organization has difficulty, obtaining the consent of existing shareholders on
approving new shareholders to pour capital into enterprise will be less difficult
Case 10: Issuing to existing shareholders in combination with flexible price to
each subject.
This is the option of issuance possible to solve all problems on ensuring “equality”
for existing shareholders and new ones. Issuing prices also reflect “priority” level to
each issued subjects.
2.2.3. Result of capital mobilization of enterprises in Vietnam securities market
* Statistics of results of capital mobilization in Vietnam securities market
-By 2012, there were 710 enterprises listing stocks on Ho Chi Minh Securities
Exchange and Hanoi Securities Exchange with total value reaches 26% GDP compared
to the same period of period year.
- In period of 2000-2004, capital mobilization of enterprises in securities market
was almost negligible, while in period of 2005 up to now, total mobilized capital of


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enterprises in securities market reached 158,938 billion VND, in which reached 55,846
billion VND in 2007 alone.
- In period of 2008-2009, capital mobilization in securities market sharply
declined with period of market sloping with VNIndex from the peak of 1,170 points
down to 300 points. By 2010, capital mobilization activities of enterprises in securities
market prospered against effect of demand stipulation package of the Government.

Since 2011 up to new, it comes back to quite state, finishing 2012 year, total mobilized
capital of enterprises in securities market reached only 16,872 billion VND.
*Some remarks about the capital mobilization process of enterprises in Vietnam
securities market
- Enterprises are getting more active taking part in market through listing its stocks
on securities markets, making changing step in term of capital mobilization mode
which is shifting from traditional channel of bank to securities market.
- There is a trend that enterprises shift and adjust to orient towards models of Joint
Stock Company and public company; enterprises are interested into and pay attention to
acquisition, merging and combination, associating with each other.
- Economic growth and movements of macro economy of domestic and
international: Financial crisis began in 2008 led to difficulty for global economy, in
which, Vietnam impacted on capital mobilization process of enterprises;
2.3. REAL STATE OF FACTORS AFFECTING CAPITAL MOBILIZATION
PROCESS OF ENTERPRISES IN VIETNAM SECURITIES MARKET
2.3.1. Investor
Experiencing 12 years of development, the account is at present increasing over
the years and reaches nearly 1.3 million in 2012, in which quaintly of foreign investors
are rather crowded. It is noteworthy that quantity of accounts increases as three times
year on year for 2005, 2006, 2007, increase as two times in 2009, which were in
effervescent market.
- Individual investors: scale of quantity of investors on population makes up
small percentage, with Vietnam’s population of 90 million people, the number of
account is nearly 1.3 million making up only 1.44% with categories: Individual
professional investors; individual investors being owners of private enterprises;
individual investors being officers, employees in agencies and enterprises;
individual investors in movements.
-Investors being organization: About 3,500 investment organizations include:

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Enterprises listing their stocks in securities market; Funds are managed, operated by
fund management company; securities company, commercial bank; investment
companies.
- Foreign investors: Quantity of transaction accounts of foreign investors has been
rapidly increasing over the recent year, with 16,100 accounts by 2012, folded 14 times
compared to the end of 2005, in which, the accounts of investors being organizations
were 1,800.
2.2.2. Issuing organization
From 5 enterprises listing stocks on in 2000, this number increased to 314
enterprises listing stocks on Ho Chi Minh Securities Exchange in 2012 and 396 ones on
Hanoi Stock Exchange. Market capitalization was 1,247 billion VD in 2000 increasing
to 764,946 billion VND. Over 12 years of operation, Vietnam securities market
witnessed the outstanding growth of the listed enterprises from profit turnover growth
to corporate administration. From there were a few enterprises in some production
branches, up to now, these two securities exchanges have converged hundred of
enterprises in many different fields and branches.
2.2.3. Securities company system
In 2012, the whole market had 105 securities Companies registered to operate
with diversified scale, from 1-2 realized operations to all operations according to
regulations of State Securities Commission of Vietnam. The most important
operations contributing to capital mobilization process are brokering and financial
consulting with majority of realized companies, there are 41/105 securities
companies realized issuance guarantee operation.
Operations of securities companies in the recent years have met some difficulties
with more than a half of securities companies at loss in 2012 and 70% of them had
accumulated loss.
2.2.4. Market management, operation agencies
2.2.4.1. State Securities Commission of Vietnam
As a dedicated management agency in securities and securities center established

on November 28
th
, 1996 with main objectives of creating comfortable environment for
mobilizing capital for development investment, ensuring securities centers to operate in
manner of organizationally, safe, public, equally and effectively, protecting benefit and
legal right of investors. Securitas Issuance Management Department is an
administrative organization directly managed by State Securities Commission of


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Vietnam implementing tasks and authority in the field of issuing, directly related to
capital mobilization of enterprises in securities market.
2.2.4.2. Ho Chi Minh Securities Exchange
On July 28
th
, 2000, the first trading session with 2 listed stock codes officially
organized in Ho Chi Minh Securities Trading Center; on May 11
th
, 2007 this center was
transformed into Ho Chi Minh Securities Exchange (HOSE), operating in model of one
member liability limited company, helped HOSE to have a position commensurate to
the world’s securities exchanges in international relation and cooperation, since then,
raising position and influence of Vietnam securities market.
2.2.4.3. Hanoi Stock Exchange
Hanoi Stock Exchange (Hanoi Securitas Trading Center) was established on basis
of transformation, re-organization of Hanoi Securities Trading Center (Established and
started operating on March 08
th
, 2005). On June 24
th

, 2009, Hanoi Securities Trading
Center made the first debut, operating under model of one member liability limited
company owned by State (representative by Ministry of Finance.
2.2.4.4. Vietnam Securities Depository
On July 27
th
, 2005, Securities Depositor was independently established; On
December 18
th
, 2008, Vietnam Securities Depository was established on ground of
transforming, re-organizing securities depositor.
By 2012, there were 8.48 billion of securities deposited in VSD, an increase of
118.5% against level of 3.88 billion in 2011, raising total securities deposited in
VSD up to 27 billion with total assets deposited in VSD of more than 641 trillion
Vietnam dongs.
2.2.4.5. Auditing companies
By 2012, there were 43 organizations accepted to audit companies in securities
market. Auditing companies provide auditing service for financial statements of
listed enterprises being mid- year and year end reports.
2.4. SOME CAUSES AFFECTING CAPITAL MOBILIZATION PROCESS OF
ENTERPRISES IN VIETNAM SECURITIES MARKET
2.4.1. In perspective of issuing organizations
-Scattering investment result in loss: Many listed enterprises were “stormy” in
implementing operation diversification strategy, doing scattering business, especially
expanding into real estate business over the past time.


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- Lack of efficient business capital mobilization options: Lack of business projects
really bringing about breakthrough step for enterprises results in difficulty in

persuading investors to pour investment capital into buying new stocks issued by
enterprises.
- Using mobilized capital of wrong purpose: This is the work resulting in losing
credit of shareholders, investors, which has negative impact on capital mobilization in
market in general.
- Inappropriate selection of time, scale of issuing: Because the issuing period is
implemented in a long time; it is very important to calculate of “market falling point”,
the most favorable conditions for investors subscribing stock.
- Issuance products are not diversified: Most of issuing periods are ordinary
stocks, lacking of other kinds such as convertible bond, dividend preferential stock….
-Internal shareholders take advantage for personal benefit: This is also a cause
degrading credit of investors in enterprises and securities market.
- Pay inadequate attention to benefit of small shareholders: Instead of explaining
contents agreed by big shareholders to others, Board of directors chooses method of
voting with enough approving percentage without creating consent, creating negative
effect.
- Inadequacies in announcing information: Situation of late submission of
financial statements, annual reports is rather common, accuracy and transparency
in company’s operation are not ensured.

- Some individual managers don’t act for benefit of shareholders: Authority is
misused for personal benefit through investment, procurement of equipment for
projects.
- State shareholders don’t want to issue because of effect on enterprise control
right: Cause of this situation is that State does not contribute additional capital and is
afraid of decreasing shareholding percentage in enterprise.
2.4.2. In perspective of investors system
- Have not attracted new investors to take part in market: Concept of a stock
investor has not been popular to a great part of people, happening of market was rather
quite over the past time.

- Organization investors haven not showed their role clearly: Many points of
time, it seemed that almost stock investors increased or decreased all, lack of
appearance of organization investors.


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- Organization investors are undiversified: The whole market has only 24
investment fund, capital mobilization for forming investment fund faces many
difficulties, funds mainly have foreign capital sources and not mobilized domestic
resources.
- Financial potential of almost investors are weak: With low income per capital
of about 1,517 USD in 2012, so investment resource through securities market is weak.
- Market monopolization of some speculators: Situation of making price, swaying
stocks happened with scale and frequency having a trend of more and more increasing.
- Lack of information, understanding, experience in investment: Transaction
follows rumors, movement without paying attention to business and production
situation of enterprises, which are rather common.
2.4.3. In perspective of securities companies
- Financial potential of securities companies system is still limited: Generally
potential of majority of securities companies in market is still limited (352 billion VND
on average and non -uniformly distributed), whereby lack of resources to invest, push
up assisting enterprises to mobilize capita in securities market.
- Some securities companies lost credit from investor: Situation of misusing
money and stocks on account of customers, not implementing transfer order of clearing,
customers can’t withdraw on account, employees of company counterfeiting signature
of customers to seek benefit, supporting short purchase in market, etc.
- Not pay attention to investing into issuing consulting work: Majority of
securities companies only focus on securities brokering, which can fast collect turnover
while issuing consultancy takes long time.
- Unhealthy competition results in low issuing fee impossible to cover costs:

Result in consequence is that consulting turnover can’t cover cost and quality of issuing
consultancy is limited.
- Issuing guarantee operation is not popular: Limited in financial potential and
deployment capacity results in unpopularity of issuing guarantee operation.
-Administration, management is in-close: Situation of leaders, employees
violating regulations of law result in degraded credit, financial capacity in some
securities company are caused by in-close administration, management of the securities
companies.



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2.4.4. In perspective of market management, operation companies
* Legal documents system:
- Securities law promulgated and effective since 2006 opened a new development
stage for Vietnam securities market. However, together with market development,
Securities law is required to supplements, amend.
- Guiding documents on implementing Law are something slowly promulgated,
even discrepancy, overlapped causing difficulty to issuing process of enterprises.
-Because Ministry of Finance is a ministry managing multi-sector, multi-field,
some legal documents have not timely adjusted capital mobilization of enterprises in
securities market.
* Market managing, supervision and operation work
- Activities of supervision, inspection and treatment of administrative violations I
the securities field showed its limited effect over the past time. Cause was that
authority of State Securities Commission of Vietnam was limited, not strong enough to
warn, stop violations from happening in future.
- It is required to complete IT system in Vietnam Securities Depository and the 2
Securities Exchange to meet market demand, avoid “throat” for payment, depository,
securities transactions in market. The 2 trading centers with almost similar operation

model exist together increasing operation cost for market.
* Taxation and fee policy in securities field
- Investors buying stock means contributing capital into enterprises, profitable
enterprises must pay corporate income tax; however investors still have to pay tax
when they are allocated dividend.
- When investors sell at loss, they still have to pay income tax, as it is very
difficult to calculate difference between sales and purchase as well as prolix procedure
in implementing this tax payment method.
- Fees paid to Securities Exchange, Depository are also significant costs in the
context of difficult market and poor liquidity.
2.4.5. Some other causes
- Happening of interest and inflation: Situation of high inflation in the economy
over the past time caused instability in macro economy, capital not turned over through
financial market and ineffective operation of market.
- Role of Association: Role of associations representing 3 subjects in securities


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market namely Listed enterprises’ association (buyers), financial investors’ association
(buyer), Securities trading association (intermediates) has not showed clearly.

CHAPTER 3
SOLUTION TO CAPITAL MOBILIZATION OF ENTERPRISES
IN SECURITIES MARKET OF VIETNAM

3.1. CAPITAL MOBILIZATION ORIENTATION OF ENTERPRISES IN
VIETNAM SECURITIES MARKET
3.1.1. Goals of Vietnam capital market development by 2020
Develop Vietnam capital market fast, synchronously, firmly, in which securities
market plays a key role; step by step leading capital market to become a n important

component of financial market, significantly contributing to mobilize capital to
development investment and reform economy. Strive to reach 70% GDP by 2020.
3.1.2. Point of view and principles of developing capital market
Form and develop structures of capital market synchronously, in which securities
market plays a important role, ensure effective mobilization and allocation of
investment capital for growth of Listed enterprises’ Association; Organize effective,
safe and healthy operation of capital market; ensure national securities.
3.1.3. Capital mobilization orientation of enterprises in Vietnam securities market
- In one hand, create clear condition for enterprises to mobilize capital in
securities market; on the other hand, it needs to have mechanism to select really
effective issuing options.
- Raise role of intermediate financial organizations, securities companies in
market.
- Create favorable conditions for listed enterprises, registration for concentrated
transaction to narrow free market in order to minimize market risks.
- Create environment for securities to be really equal, public, and efficient and
protect rights of investors, enhance belief into market.
3.2. SOLUTION TO ENHANCE CAPITAL MOBILIZATION OF
ENTERPRISES IN VIETNAM SECURITIES MARKET
3.2.1. Solutions on part of enterprises


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* Improve efficiency of business and production:
- Determine reasonable, close capital structure appropriate to Enterprise scale,
avoid excessive misusing of loan, especially short term loan ; Pay attention to setting
up and developing the team for enterprises and raise operation efficiency of
management apparatus of enterprise: Build good relationship between managers and
employees, always respect and encourage self control and creation; Establish system of
exchange and treating information in enterprises; Apply advanced science and

technology into production and business;
- Environment administration: Aspects of business environment affects on
business efficiency of Enterprises such as: policies, mechanism of State, world
economic situation, international exchange, political system; bilateral relationship
between countries; multilateral agreements controlling relationship between countries;
international organizations, etc.
* Study, seek for investment projects, plans on expanding production and business
effectively: In order to build plans, investment projects of expanding business and
production, it is required enterprises to have a vision, mind and talent, dedicated to
enterprises so as to work out appropriate decisions on developing enterprises.
* Raise role of Board of supervisors of enterprises, encourage supervision of
shareholders on enterprises:
- Board of supervisors must independently operate in order to check the
appropriateness, legality and diligence in management, operation of business activities,
in accounting, statistical work organization and preparing financial statements.
- Comply with legal regulations, not cause interruption, difficulty to management,
operation of enterprises.
- Joint stock company must encourage shareholders to exchange about business
and production situation of enterprises, any inquiries must be explained clearly,
satisfactory shareholders and enterprises
- To enhance role of shareholders in supervision of activities of Company, it is
required to bring role of Board of supervisors of Company into full play as link
between shareholders and enterprise.
* Ensure harmony in benefit of shareholders and employees in company: Enterprises
need to understand in order to comply with general standards of market, avoid in-
favorable information about profit allocation which causes difficulty in mobilizing
capital.


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* Strictly obey all regulations on announcing information according to regulation of
State Securities Commission of Vietnam and Securities Exchanges, actively supply
information to investors.
3.2.2. Development of investors system
*Individual investors:
- Organize training programs free of charge on securities and securities market;
- Disseminate about benefit of investing in securities: communication work on
securities market needs to be enhanced through public television programs, encourage
investors to save a certain percentage of their total assets for investing to securities
market.
- Avoid adverse information, not true to nature of market attached to supply of
transparent exact, sufficient and information to investors.
- Give tax, fee preferential to securities investors: in order to encourage investor to
take part in market, it is required to implement preferential policies on these subjects.
* Organizational investors: In order to promote organizational investors to take
part in market, it is required to complete legal framework, allow open funds to go into
operation, re-consider tax polices imposed on organizations, etc.
* Foreign investors: continue to implement equitization route and lead major
enterprise s in the banking, petroleum, telecommunication fields to list their stocks on
securities market creating investment opportunities for foreign investors.
3.2.3. Solutions on part of intermediate financial organizations
* Actively access enterprises to set up feasible issuance projects
- Securities companies need to study and access to enterprises listed in securities
market in order to understand about demand for capital.
- Active in access the listed enterprises to support them to set up plans on
mobilizing capital through securities.
- Classify, assess the listed enterprises in 02 securities exchanges to seek for
sectors, fields, enterprises having development prospects able to build feasible plans;
* Raise quality of issuance consultancy
- Raise quality of issuance consultancy showed in supporting enterprises to

build transparent, persuading clear information announcement,
- In order to raise quality of issuance consulting service, securities company need to


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build their own issuance consulting service process from approach to customers till
completion of issuing period, implementing price stabilization after issuance.
* Push up deployment of issuance guarantee operation
- Implementing issuance guarantee operation of securities companies is the most
clear and persuading commitment and confirmation to investors.
- Enhance financial capacity for issuance guarantors: increase retained profit
percentage; merge, combination of securities companies.
- Build appropriate, safe issuing guarantee process suitable to real conditions,
compliant with legal regulation.
- On other hand, securities companies need to enhance mutual cooperation to
realize joint issuing guarantee plans.
* Select mode and instruments of issuing: Pay attention to modes and instruments
of issuing. Issuance consulting companies must analyze pros and cons of each mode,
instrument of issuing, whereby recommend, consult the best optimal plan for enterprise
* Determine appropriate price for the issuing period: Issuing price must ensure to
be accepted by market, ensure harmony in benefit between existing shareholders and
new shareholders. Giving reasonable price suitable to issuing mode is a decisive factor
to success of issuing period, determining whether the option of mobilizing capital
through securities to be successful or not.
* Support enterprises in disseminating information about the issuing period to
market: Arrange roadshow programs, prepare materials, content to show in the
introduction session; make list of invitees to the introduction session; write some
writings to propagandize about enterprise and the issuing period in mass media;
together with enterprise to meet, contact some big investors, organizational investors.
* Expand relations, build domestic and international customer network: Set up

relations with organizational and individual investors; expand relations with foreign
investors through conference, seminars introducing investment opportunities.
3.2.4. Solutions on part of State management agencies
* For issuing organization
-Regulation that issuing stocks must have issuing guarantee organization: This
regulation is necessary to raise goods quality for market, avoid situation of situation
that issuing is without production and businesses plan to effective use of mobilized
capital, losing credit of investors.


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- Facilitate legible issuing organizations to be quickly licensed and raise appraisal
quality: help appraisal of issuing profile to be quick and accurate in order to ensure
benefit of issuing organizations as well as benefit of public investors.
- Supervise capital use process of issuing organizations: Coordinate between State
Securities Commission of Vietnam and the Securities Exchanges to strictly supervise
health as well as issuing plans and capital use of the issuing organizations.
- Quickly re-arrange, restructure listed enterprises in securities market: State
Securities Commission of Vietnam and the Securities Exchanges need to have projects
to eliminate weak companies as well as set up conditions to raise listing standards
combined with examination of production and business situation, real financial
conditions of the listed enterprises to work out treatment measures.
- Shorten period from issuing additional stocks to listing: State Securities
Commission of Vietnam and the Securities Exchanges need to have combination
mechanism in order to shorten this time towards attaching newly issued stock to be
disposited by default and listed without additional procedures.
- Allow to issue stock lower than face value: solve problems in capital
mobilization of many enterprises in difficult business situation; enterprises urgently
need capital resources to restructure operations, raise financial capacity for enterprises.
* For investors in market

- Raise efficiency of supervision work in securities market: equip modern software
to detect abnormal transactions; specialize supervisions; contact players in market to
exchange, receive feedback information about violations to transaction regulations.
- Building up credit for securities investors: State Securities Commission of
Vietnam should hold monthly press conferences to exchange state management work
for securities market, announce figures of capital mobilization through securities
market, etc.
- Consider recommendations on exempting, reducing taxes, fees for securities
investors, etc.
* For securities companies
- Speed up implementation of projects on arranging, restructuring securities
companies system: check up, assess financial capacity, actual operation situation,
management ability whereby classify securities companies to have orientation of
arrange, restructuring securities companies.
- Raise occupational ethics of leaders and employees of Securities Company: State


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Securities Commission of Vietnam and securities trading association and financial
investment associations need to have solution to standardize, raise occupational ethics
of employees of securities companies.
- Seriously ask securities companies to manage of deposit of investors
transparently in banks: It is required participation of banks system to able to speed up
account separation.
- Have regulations on safety insurance for securities companies in loans of
advancing securities sales money
- Allow securities companies to borrow margin loans when customers buy newly
issued stocks.
- Allow securities companies to be active in list of margin loan stocks.
* Facilitate to speed up market development

- Continue to complete legal documents to create a favorable environment for
capital mobilization enterprises in market.
- Raise liquidity of market: Correctly assess role of short term investors to work
out suitable policies.
- Raise role, position of State Securities Commission of Vietnam as status of a
- Raise role, position of State Securities Commission of Vietnam as a State
management agency by separating State Securities Commission of Vietnam out of
Ministry of Finance with tasks and authority as a ministerial agency.


CONCLUSION
Over more than 12 years of operation, securities market has been forming a capital
mobilization channel for enterprises, partially contributing to general development of
economy. At the same time, securities market witnessed effervescent as well as quite
periods for enterprises in capital mobilization and it is time to adjust securities to
become a sustainable effective key capital mobilization channel for enterprises.
By study methods, summarizing and analysis of data, thesis completed the set out
study objectives:
Firstly, systemize basic issues on capital mobilization of enterprises on securities
market. The thesis confirms important role of securities market in mobilizing capital for
enterprises. Systemize theories on capital mobilization modes of enterprises while


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clarify role of subjects in capital mobilization of enterprises. Besides, thesis also works
out some international experience in capital mobilization of enterprises in securities
market in order for reference for application to work out solutions for Vietnam
securities market.
Secondly, analyze actual capital mobilization situation of enterprises in Vietnam
securities market. Thesis generalizes some capital mobilization results of Vietnam

securities market from its establishment; analyze some typical enterprises in capital
mobilization in market. Confronting difficult situation in capital mobilization since mid
year 2010 up to now, Thesis analyzed and clarified causes of the difficulties in
mobilizing capital, indicate clots preventing capital mobilization of enterprises from
developing in Vietnam securities market
Thirdly, Thesis works out system of solutions to difficulties, obstacles during
capital mobilization of enterprises. Solutions are towards sustainability in capital
mobilization of enterprises in particular and whole securities market in general,
overcoming some negative conditions in securities market. Thesis also works out very
specific recommendations for each subject participating capital mobilization of
enterprises: Issuing organizations, investors, securities companies and State
management agency.
Author believes that the system of solutions given out in the Thesis will contribute
to make securities market effervescent again, securities market really becomes an
important capital mobilization for economy, contribute to solve capital problem to lead
our country to become an industrialized country in modernization orientation by 2020.