Luận văn tiếng anh improving the effectiveness of enterprise financial cosultancy activities in vietinbank securities company

1 INTRODUCTION 1 Rationale Recently, in front of the background of not only the focus of the government on developing the national economy and increasing industrialization modernization but also the t[.]

1 Rationale

Recently, in front of the background of not only the focus of the government

on developing the national economy and increasing industrialization modernization but also the trend of rapidly developing and integrating economy,Vietnamese conglomerates are both having abundant opportunities and facing withnumerous challenges

-Specifically, the national economy has innumerable difficulties because ofthe instability of international economy and politics In addition, the manufacturingand business of conglomerates also face many challenges Vietnamese enterprisesnot only must focus on innovating manufacturing, developing administering skillsand improving cutting-edge technologies but also have to address financialproblems which are one of factors contributing to addressing their difficulties

Companies providing the services of financial consultancy have been bornwith the aim of supporting enterprises to tackle financial issues However, financialconsultancy in Vietnam in recent years has still not met the demands and the needs

of enterprises, the challenges of the contemporary economy as well as not satisfythe expectation of the leaders and owners of consulting firms This reality requires

us to have to have solutions to improve and develop financial consultancy forconglomerates and corporations in the period of expansion and integration withinternational economies

Through evaluating the possibility of catering for the services of financialconsultancy in the professional and comprehensive way, in comparison with othertypes, we find that stock companies are the type which has the most significantcapacities for accessing and addressing issues which enterprises are facing with

At the present time, Vietnamese stock firms are having an abundance ofintractable difficulties in applying the financial consultancy for their own firms Thefirst rationale is the swift rocketing of the number of stock corporations besides the

rapid development of Vietnamese stock market Up to the day December 31st 2014,stock capital in all Vietnamese market was 1,128 thousand billion dong, accountingfor 31.5% of GDP The number of stock companies in Vietnamese market were 4 inthe year 2000, soaring to 105 firms established in 2009 and then declining to 83firms through the re-structure progress The increasing number of stock companieshad a part in making the stock market more dynamically, consolidating the stockmarket more strongly and bringing about more products and choices of inventors.However, increasing the number of stock companies is one of root causes making acontribution to raise difficulties for stock firms through narrowing market share.Secondly, following the route of joining WHO, since January 11st 2012, stockcompanies having 100% capital from foreign countries have been established inVietnam Although domestic stock companies have had a long period to build theirtrade names, expand the customer net and improve the quality of human resources,they still have to face numerous challenges because foreign conglomerates possesscopious advantages about experience and funds Compare to the achievement ofinternational stock companies, the results which domestic stock companies achievedare still negligible

To be one of seven stock companies established earliest in Vietnam,VietinBankSc have affirmed their positon in the field of financial consultancy moresustainably with every passing day In recent years, VietinBankSc have focused onthe financial consultancy of enterprises and consider that this activity is their coreactivity and top-ranking advantage Nevertheless, in front of many difficulties ofbusiness environment, VietinBankSc really need solutions in order to develop theactivities of enterprise financial consultancy Therefore, I chose this topic toconduct my research for my master degree with the name: “ Improving theeffectiveness of enterprise financial cosultancy activities in Vietinbank SecuritiesCompany ”

2 Research objectives

- To systematize theoretical matters about the enterprise financialconsultancy of stock companies

- To evaluate the reality of enterprise financial consultancy inVietinBankSc and bring about a comprehensive view of enterprise financialconsultancy in recent years.

- To propose several solutions and recommendations in order to developactivities about enterprise financial consultancy in VietinBankSc

3 The scope of research

- The object of this research is the activities of enterprise financialconsultancy of stock companies

- The scale of this research is the reality of enterprise financial consultancy inVietinBankSc during the period 2014 – 2016

4 Research methodology

This research utilized the method of dialectical materialism, combining withothers including analyzing method, statistics, summary and comparison In addition,illustrational model was made use of with the aim of bringing about somereasonable analysis and suggestions, guaranteeing the scientific quality, reality andobjectiveness of topics of this research

5 The structure of this research

Besides some parts including the beginning, the conclusion, contents, tables

of abbreviating letters, this thesis embrace 3 chapters:

Chapter1:Overall theory about the activities of enterprise financial

consultancy of stock companies

Chapter2:The reality of activities of enterprise financial consultancy in

VietinBankSc

Chapter 3: Solutions and recommendations in order to developing the

activity of enterprise financial consultancy in VietinBankSc

CHAPTER 1.OVERALL THEORY ABOUT THE ACTIVITIES OF ENTERPRISE FINANCIAL CONSULTANCY OF STOCK COMPANIES1.1 The overview of stock companies

1.1.1 The definition of stock companies

Stock markets is the places where stock is traded and switched There areabundant objects involving stock markets but there are negligible individuals havingcapacity of analyzing and specifying the price of stock Hence, during the process oftaking shape and developing of stock markets, intermediary has become the specificand basic operating principle in stock markets and step by step, all trade in stockmarkets is conducted through intermediary financial organizations, most throughstock companies

Following The Stock Law number 70/2006/QH11 (reforming from The lawnumber 62/2012/QH12), stock companies are joint-stock companies, limitedliability companies which are established basing on the Vietnamese rules in order toconduct trade following licenses issued by the State Security Commission ofVietnam Stock companies have permission to do some following trade:

- To mediate stock

- Privately trading stock

- To issue stock

- To advise stock investment

1.1.2 The roles of stock companies

Up to date, the taking shape and development of Vietnamese stock markethave made a significant contribution to perfecting the system of financial market inVietnam These achievements are obtained thanks to the considerable contributions

of stock companies in supporting stock market to develop sustainably, becoming aneffective channel in mobilizing capital and aid to trade stock more quickly andeasily To comprehend the essence of stock companies for stock markets, we have

to understand the roles of stock company with respect to each individual subject instock markets

1.1.3.1 For stock markets

To contribute to take shape and regulate markets

The price of stock is built by markets However, to have the final price, thepurchasers and sellers must trade through stock companies because both of them donot involve the stock trade Furthermore, stock companies also play a role inadvising investment, therefore they always have a capacity for purveyinginformation about markets and stock price to investors Specifically, in respect ofthe activities of stock trade, stock companies are consultative organizations playing

a role in advancing the beginning price for investors to make bid, therebysupporting them to make decisions to trade stock

To contribute to increasethe mobility of financial property

Stock markets play a role in increasing the mobility of financial property andthis role of stock markets can be performed through stock companies In primarymarket, by means of doing activities like consultancy to releasing and bidding,stock companies not only assist organizations to mobilize capital to expandmanufacturing and trading activities but also increase the mobility of financialproperty of investors through mediating trade in OTC markets

In secondary markets, stock companies aid investors to conduct trade,thereby assisting them to change stock into money back and forth in an easy way.Therefore, all aforementioned activities of stock companies help to increase themobility of financial property

1.1.3.2 For releasing organizations

Releasing organizations participate in stock markets with a view tomobilizing capital through release stock Accordingly, through several activities likeconsultancy to releasing, releasing agents, stock companies play a role in aidingreleasing organizations to mobilize capital successfully in stock markets Stockcompanies is the intermediary organizations supporting to rotate capital frompeople/companies possessing capital (investors) to those demanding capital(releasing organizations)

1.1.3.3 For investors

Through activities like mediating, investing consultancy, managing investinglists, stock companies play a role in decreasing the price and time of trade, therebyimproving the effectiveness of investing capital For common merchandise,purchasing and selling through intermediaries are able to increase the expenditurefor purchasers and sellers Nevertheless, for stock markets, the flexibility of stockprice, as well as high risk can be able to make investors to pay more expense, effortand time to cull information before making an investing decision Nonetheless,through stock companies, highly professional ability can help investors to investtheir capital in an effective way

1.1.3.4 For market managing agencies

Stock companies make a contribution towards purveying information aboutstock markets to market managing agencies and this role is showed through thefact that stock companies build impressions or papers of announcing information,handbills when they perform activities like releasing consultancy, biddingconsultancy for releasing organizations As a result, investors and managingagencies can have accurate and trustful information and comments about stockreality and manufacturing activities of releasing organizations, thereby being able

to make decisions In addition, stock companies are the intermediaries performingstock trade in stock market, hence stock companies are the organizationsproviding information about investors and their business Owing to thisinformation, market managing agencies can be able to control and suppress thesway and monopoly of markets

It seems that for subjects in stock markets, stock companies have asignificant part in creating the mechanism of capital mobilization, being marketbuilding organizations, making the mobility of stock and contributing to controllingthe stabilization of markets, thereby having a part in promoting the development ofstock markets in particular and the economy in general

1.1.3 Operating models of stock companies

There are two kinds of models of stock companies, including multifunctionalbank company model and specialized stock company model

1.1.3.1 Multifunctional bank company model

Commercial banks operate like subjects trading stock, insurance and money.This model is showed through 2 forms:

- Total multifunctional model: one bank can directly participate in allactivities of trading money, stock, insurance as well as other financial serviceswithout any individuals It is also called Germanic-like bank model

+ One of the advantages of this model is that banks can combine with others inabundant fields of business, thereby declining the risks in trade activities bydiversifying investment Furthermore, increasing the withstanding ability of banks infront of the volatility of stock markets is another advantage of this model Moreover,banks can exploit their advantages in trading money with large capital, cutting-edgedfacilities, thereby comprehending their customers as well as enterprises when they dotheir professionals of granting credit and sponsoring projects

+ On the other hand, this model has some drawbacks Firstly, onedisadvantage is that banks bear responsibilities for both arranging credit andarranging business, therefore the ability of specialization is not as deep asspecialized stock companies In addition, because there are difficulties indistinguishing between bank activities and stock trade activities in theunhealthy law environment, banks easily engender the situation of capturingmarkets and then the varies of stock markets have substantial effects on moneytrade and the economy

Because aforesaid drawbacks, after the slump of stock market in the 1929 –

1933 period, most countries utilize specialized stock company model, negligiblecountries still apply this model

- Partial multifunctional model: banks having requirementsof stock trade andinsurance have to establish subsidiaries operating apart from money trade Thismodel is called British-like bank model.

1.1.3.2 Specialized stock company model

Activities of stock trade are the responsibilities of specialized independentcompanies in stock field and banks do not involve in stock trade

The benefit of this model is to be able to constrain the risks for bank system,bringing about advantages for stock companies to specialize in the stock field toenhance the development of stock markets This model is applied quite ubiquitously

in the United States, Japan, Korea, Thailand and so on

Nonetheless, because of the growing tendency of establishment of financialoctopuses, some markets allow companies to not only trade currency, stock,insurance but also establish both conglomerates and subsidiary companies Theyclosely manage each other and also operate independently

1.1.4 Specialist skills of stock companies

Depending on specialist skills of stock companies possessing different levels

of capital, the Decree 58/2012/NĐ-CP stipulated the capital for trading specialistskills of stock companies in Vietnam, including:

- Mediating stock: 25 billion vietnamdong;

- Privately trading stock: 100 billion vietnamdong;

- Guaranteeing to releasestock: 165 billion vietnamdong;

- Advisingstock investment: 10 billion vietnamdong

If organizations want to have licenses for many trading specialist skills, thetotal capital is the summary of capital

1.1.4.1 Mediating stock

Mediating stock is the intermediary activity of selling and buying stock forcustomers

Mediating stock is the direct activity which creates the image and tradename for companies, therefore stock companies extremely focus on this activity.This is an activity of trading stock which stock companies are intermediaries forselling and buying stock Stock companies represent customers in the process ofcommercial transaction.

Through mediating stock, stock companies purvey many services likeconsulting investment, loans with the aim of supporting investors to conduct tradeeasily with the lowest expenditure

1.1.4.2 Privately trading stock

Privately trading stock is an activity of selling and buying stock forthemselves This activity of stock companies is done through the trading mechanism

in trading floor or OTC markets The aim of this activity is to have profits for stock companies through trading stock in the markets

self-This skill of stock company parallels the skill of mediating, therefore in theprocess of doing this skill, there is conflicts about benefits between customers andstock companies Accordingly, the rules of countries stipulate that therearerequirements about discriminating between mediating stock and privately tradingstock When doing privately trading stock, stock companies have permission to dothis skill through one stock account which was registered with Trading StockDepartment and this department will supervisor the trading activities in a strict way.Moreover, stock companies must prioritize the requirements of customers overprivately trading stock

With respect to the skill of mediating stock, stock companies only play anintermediary role in trading stock for customers with the aim of receiving theexpenditure of mediating stock By contrast, in respect of privately trading stock,stock companies utilize huge capital in order to build up the market Hence, in order

to perform the skill of privately trading stock demands effectively, stock companieshave to possess high-quality personnel to make appropriate decisions in investment

1.1.4.3 Guaranteeing to release stock

Guaranteeing to release stock is the activity that stock companies undertakewith the releasing organization to perform procedures before selling stock,purchasing a part or all stock of releasing stock companies to resell or buy theremains of stock which do not distribute or support the releasing organization indistributing stock to the public

Guaranteeing to release stock is a skill which is complicated and risky forstock companies hence the cost for guaranteeing to release stock is usually exorbitant

When an organization wants to release stock connected with guaranteeing,this organization will send requests to stock companies Stock companies willconclude a contract about consultancy and guaranteeing to release stock with thereleasing organization in order to advise the kind of stock released, the amount

of stock released, the price of stock, the way to distribution, the range and thecost of guaranteeing

1.1.4.4 Advising stock investment

Advising stock investment is the activity that stock companies supply investors with the results of analysis, reports of analysis and recommendations in relation to stock

- The content of advising stock investment has to be appropriate and suitable,based on logical and trustful information Recommendations in advising stockinvestment have to be relevant and suitable for the content of stock and stockmarket analyzed The analyzing reports about stock and stock markets andinvestment recommendations must cite quotations and data, having the name ofindividuals who bear the responsibility for the reports and recommendations

- Stock companies advising investment for customers have to guarantee thattheir customers make decisions based on suitable and sufficient informationincluding both the content and risks of products and the following services

- Stock companies have to keep the secrets about the information of peoplewho use the consulting services in the process of consultancy, excluding the caseswhich receive the agreement of customers or the rule.

- Stock companies advising investment have to be suitable for the purpose ofinvestment and the financial situation of customers and bear the responsibility forthe analyzing results and the reliability of information supplied to customers

1.1.4.5 Advising financial enterprises

Advising financial enterprises is one skill of stock companies, depending onthe needs of enterprises; basing on their capacity and knowledge, stock companiescould advise enterprises about the way to address problems in financial activities, tobuild financial plans in trade and arrange capital following the need of enterprises

In this time, advising financial enterprises is the field which stock companiesspecially pay their attention to Besides bringing about profit for companies, thisactivity can create a large net of potential customers In addition, advising finance isable to build the brand name and image for companies, establish the relationshipwith customers and to be the basis for creating the beginning in order to developother activities

1.1.4.6 Other activities

With the aim of bringing about the best services for the customers of stockcompanies, besides main activities which bring almost profit for stock companies,these companies also perform others activities in order to satisfy the demands andrequirements of customers like: enterprise financial consultancy, depositing stock,managing the list of investment, loans…

Managing the list of investment

This is a skill of managing capital delegated by customers in order to invest

in stock through the list of investment, thereby increasing benefits for them basing

on creating profit and preserving customers’ capital In addition, this skill is a kind

of consultancy, stock companies not only advise investors but also make decisions

of trading on behalf of investors following a strategy or a principle which customersaccepted or requested

Depositing stock

This skill is that stock companies store and conserve the stock of customersthrough the accounts of depositing stock This is a mandatory requirement in stocktrading because when customers trade stock in markets, they must open stockaccounts in stock companies

Loaning and advancing selling money

Regarding developed stock markets, besides mediating stock for customers

in order to possess the cost of mediating, stock companies also operate serviceswhich supply loans to customers or let them advance selling money after the orders

of customers were done successfully

1.2 The enterprise financial consultancy of stock companies

1.2.1 The definition of enterprise financial consultancy

Enterprise financial consultancy is a responsibility of stock companies,springing from the demand of enterprises in the period of modifying model,increasing the scale of operation or re-constructing and so on Following that, stockcompanies will adviseenterprises about financial matters and others relating finance

in order to assist enterprises to address their problems and difficulties in financialactivities, coinciding with aiding in building long-period financial plans and capitalarranging projects

Following the rules in the Circular 210/2012/TT-BTC, stock companies havepermission to perform the activity of financial consultancy, including:

- Advising about restructure, merging, consolidating and trading enterprises

- Advising about administration and strategies for enterprises

- Advising about solicitation and sticking up stock

- Advising about equitization, evaluating the value of enterprises

- Advisingother fields about finance following the rules

Depending on the needs of enterprises, stock companies usually supplyfollowing kinds of consultancy:

- Advising about restructure, merging, consolidating and trading enterprises;

- Advising about assessing the value of enterprises (if having sufficientconditions);

- Advising about building the projects of equitization;

- Advising about auctioning stock;

- Advising about releasing stock;

- Advising about sticking up

Each stock company can supply customers with some or all aforementionedservices, relying on the ability of companies as well as the needs of customers.Stock companies will have the expenditure of consultancy from customers and thelevel of expenditure depends on each kind of services

1.2.2 The role of the activity of enterprise financial consultancy

1.2.2.1 For enterprises

Financial activities are always the crucial fields of any enterprise Suitablefinancial activities not only assist enterprises to have sustainability but also createmaximum benefits from available resources Nonetheless, not every time enterprisesare able to do all activities efficiently, especially complicated activities likeassessing the value of enterprises, releasing and auctioning stock, trading andconsolidating enterprises Therefore, the support of professional consultingorganizations like stock companies is of the essence

With regard to the financial consultancy activities of stock companies,possessing high-quality and professional personnel can aid enterprises to:

- Husband resources, time and expenditure in the process of equitization,auctioning, releasing, sticking up stock… in order to abide by the current rules

- Build the images and promote trade names of enterprises in the markets

- Build the medium and long plans of finance for enterprises.

1.2.2.2.For stock companies

In regard to stock companies, enterprise financial consultancy is a vitalactivity in the process of development and trade The ability of supplying financialconsultancy to customers can affect the prestige and the level of stock companies inthe markets This ability is showed through 2 following sides:

+ The level of heterogeneity of financial consultancy services

+ The quality of financial consultancy services supplied

The activity of enterprise financial consultancy also brings about incomes tostock companies Moreover, in the current period of the explosion of financialconsultancy, the earnings from these activities account for large proportion of thetotal incomes of stock companies more and more Specially, not like other skills ofstock companies (like mediating stock), the activity of enterprise financialconsultancy does not require much capital and assistants The most important factor

is human resources

Besides bringing about incomes to stock companies, the activity ofenterprise financial consultancy also aids enterprises in promoting and enhancingtheir images This is the vital beginning for stock companies in expanding anddeveloping other trades

1.2.2.3 For stock markets

Through the activity of enterprise financial consultancy, stock companiesassist stock markets to:

- Enhance the role of capital channel through consultancy of releasing stockfor enterprises

- Assist enterprises to broaden their knowledge and information about stockmarkets and support enterprises to participate in stock markets, thereby improvingthe development of stock markets

- Reconstruct enterprise which operate inefficiently and aid them to haveoptimal solutions to ameliorate the conditions of manufacturing and trading, therebyenhancing the quality of merchandise in stock markets.

1.2.3 The content of the activity of enterprise financial consultancy

1.2.3.1 Advising to assess thevalue of enterprises

The value of enterprises is showed through money and is measured by thenumber of incomes which enterprises can bring to investors in the process ofmanufacturing and trading

In fact, the assessment of the value of enterprises is to measure earningswhich enterprises can create in the process of manufacturing and trading, becomingthe basis of common trading activities in the markets

There are 2 methods used at the present time: property method and moneystream discounting method

Stock companies have to choose and utilize different assessment methods in

a suitable way Each method is built basing on foundations and serve subjects withdifferent purposes

 Property method

- The basis to assess the value of enterprises following the property methodThe method with the aim of assessing the value of enterprises followingproperty say that the value of enterprises is equal to the summary of each property

in balance sheet and then deduct the loans of enterprises The value of property ismeasured by the using effect and exploit them with a view to creating financialbenefits in the future

- The formula to assess the value of enterprise following the property method:

V0= Vt- VnIncluding:

V0: the real value of capital of the government in enterprises

Vt: the real value of enterprises after re-assessment

Vn: the value of loans, the remainder of the fund of reward, welfare and theexpenditure of life-work

- The subjects applied:

Property method usually apply for small and medium enterprises, themoderate range of property, mainly for manufacturing enterprises possessingmachinery and equipment which account for almost the proportion of propertyand play a key role in the activity of business of enterprises Particularly,regarding commercial enterprises, enterprises trading software or managingfinance, the assessment of the value of enterprise usually apply money streamdiscounting method

- The benefits and drawbacks of property method

+ The benefits:

One advantage of this method is that it can clearly list all property ofenterprise, to be easy in calculation, not complicated in analysis and assessing the

remaining value of property Furthermore, this method reflects existing value ofproperty of enterprises in a sufficient and visual way.

+ The drawbacks:

One disadvantage of this method is that it only assesses the value ofenterprises in tranquil conditions, not assesses the prospect about the ability ofcreating profit of enterprises in the future In addition, there are difficulties whenassessing the value of enterprise which run in particular fields Last but not least,this method cannot assess the value of machinery following the cost of markets

 Money stream discounting method

This method is built basing on a basic principle: the value of enterprises isassessed through modernizing the stream of incomes by discounting that streamfollowing a suitable discount rate and including the risks of enterprises.Accordingly, with respect to this method, there are 2 the most important andindispensable factors including the stream of annual incomes and discount rate

Each money stream has their own different discount rate, including:

- For the stream of incomes belonging to the owners' equity, discount isequal to equity capital

- For the stream of incomes about whole enterprise, discount is equal toaverage capital cost of enterprise

The formula to assess the value of enterprises following this method is:The formula to assess discount rate:

K = Rf + RpIncluding:

In order to evaluate the stream of money in the future, it has to assess theannual growth rate of dividend (g):

g = b x RIncluding:

b: after-tax profit to re-invest

R: the rate of after-tax profitabove average owners' equity of future yearsAfter determining discount rate and dividend growth rate, the real value ofowners’ equity will be calculated following the formula:

(1+ K ) nThe current value of owners’ equity of the year n.

i the order of next years from the year assessing the value of enterprises (i = 1

 n)

Di The after-tax profit in order to divide dividend of the year i

n The number of future years opted (from 3 to 5 years)

Pn The value of owners’ equity in the year n and to be assessed following theformula:

Pn= K−g Dn+1The real value of enterprises in the assessing time:

The real = The real value of + The real + Non-business

The real loans having to pay = Total loans in account books – The loans nothaving to pay + The value of the right of land use for the areas assigned.

- Subjects of application:

The money stream discounting method is usually applied for enterpriseswhich operate in the fields of technology, software manufacturing and financialorganizations These enterprises possess fixed assets which their cost does notaccount for large proportion of the total property The value of enterprises is createdmainly from human resources and the trade name of enterprises

- The benefits and drawbacks of this method:

+ The benefits:

This method is utilized to assess the value of enterprises in the activeconditions because allfactors affecting the trading activities in the future need to bemeasured like the profit, the expenditure, the income taxes, discount rate and so on

+ The drawbacks:

This method has difficulties in measuring discount rate and the period ofinvestment For small enterprises not have trade strategies or have unclear tradestrategies, this method is sometimes not practical In addition, this method requiresthe assessor to have to possess professional abilities in appraising investmentprojects

1.2.3.2 Advising to build the projects of equitization

The equitization of enterprises can be comprehended that it is the process ofconverting from one-owner enterprises into joint-stock companies The equitizationcan happen in private enterprises, limited liability companies and state-ownedcompanies In fact, equitization is the process of diversifying possession in anenterprise with the aim of achieving following aims:

- To convert enterprises which the government do not hold all 100 percent ofcapitals into multi-owner enterprises, mobilizing the capital of domestic and foreigninvestors with a view to enhancing the financial abilities, renovating technology,innovating the way of management in order to improve the effectiveness and thecompetitive capacity of the economy.

- In order to prove the owning role of workers and shareholders, to enhancethe supervising of investors for enterprises, to harmoniously guarantee the benefits

of the government, enterprises, investors and workers in enterprises

- To do publicly and clearly following the principles of markets, to remedythe situation of equitization only in internal enterprises, linking to the development

of capital markets and stock markets

Relying on the aforementioned rules and the real needs of enterprises, stockcompanies will supply the services of consulting to build the projects ofequitization, including:

- To assess the reality of companies at the time which assesses the value ofenterprises: property, finance, loans and so on

- To advise the plans to develop in 5 years after equitization

- To advise to build the way how to use human resources: dividing labor,setting the supplementary plans and training the workers in a way suitable for theplans of development of companies after equitization

- To advise the structure of share capital: to build the scale of share capitalsuitable for the request of manufacturing and trading of enterprises afterequitization, including the amount of stock of the government, the amount of stocksold to workers, the union and auctioning off to investors

- To advise to build the draft of regulations for new stock companies

In a word, the activities of consultancy of building equitization play animportant role in the progress of equitization of enterprises If not having this step,enterprises cannot achieve the aims of equitization

1.2.3.3 Advising to auction stock

Auctioning stock is the activity of selling stock of a releasing organization toinvestors including the competition of price It can be the first time thatgovernmental enterprises sell stock when equitization or stock companies releasemore stock to the public through the activity of auctioning Stock auctioning canassist to increase the competition and decrease the risks for investors Through themechanism of establishing of the price between supplying and request, basing onthe principle of prioritizing the highest price to the lowest price, the mostappropriate price for investors will be established

To be the intermediary auctioning organizations, stock companies willsupply the services of advising releasing organizations aboutstock auctioning Stockcompanies bear the responsibility for building the announcing impression about theinformation and the regulations of auctioning, specifying the beginning price by themost suitable methods of specification for the trading characteristics of enterprises.Furthermore, stock companies are the units which release auctioning petitions,receive deposits and hold auctions to determine the final results

1.2.3.4 Advising to release stock

Advising to release stock is the activity which stock companies dosupporting activities in the process of releasing stock of releasing organizationsthrough their resources

In the process of manufacturing and trading, adding capital for enterprises is

an essential activity However, not every time enterprises can address issues aboutcapital mobilization in an easy way.Besides mobilizing capital through credit (loancommercial banks), mobilizing capital through stock markets (releasing stock) isbecoming a ubiquitous, effective channel of capital mobilization for manifoldenterprises On the other hand, in order to perform the activity of releasing stock,enterprises have difficulties in operation so they need to be received advising andinstruction of organizations which possess much experience and high quality in thefield of releasing stock To begin from this realistic needs, stock companiessupplied the services of advising to release stock for enterprises

The achievement of a releasing course depends a lot on careful and cautiouscalculations in the activities of building the releasing plans, the plans of capitaluse, the assessment of the appropriate level of distributing price for subjectscombining with activities with the aim of effectively improving the images ofenterprises to investors.

Commonly, enterprises have permission to release stock to mobilize capital

by 2 following forms:

- Releasing stock to the public

- Releasing stock separately

Although the natures of 2 releasing forms are different, in general, whendoing the activities of advising to release stock for any cases, stock companies have

to do following consulting activities:

- To advise to build releasing plans and the plans of using capital obtained

by releasing suitable for the features of enterprises in order to the maximumfinancial effects

- To assess the price of stock to be the basis for assessing the releasing pricefor relevant subjects

- To build announcing impressions about enterprises and releasing courses tointroduce to investors

- To accomplish procedures about profiles and foster the process ofdistributing stock in the shortest time

1.2.3.5 Advising to stick up stock

Sticking up stock is a process of naming stock which fully meet the demands

of Stock Trading Department

To facilitate the process of capital mobilization in stock markets as well asimprove the liquidity of stock, enterprises will let their stock stick up in StockTrading Department This is the process that Stock Trading Department acceptsreleasing companies to have permission to stick up stock in Stock Trading

Department if these companies meet the demands of Stock Trading Department forconditions of sticking up.

The activity of sticking up has requirement about the belief of investors inmarkets Companies bearing the responsibility for stocking up must meet therequirement in the rule of stocking up which Stock Trading Departmentpromulgated Normally, after sticking up, companies have to abide by the 2 rules ofannouncing information including (1) periodically announcing information aboutFinancial reports and documents about meetings of shareholders and so on and (2)suddenly announcing information on decisions of the board of directors, eventsbeing able to affect the price of stock in a timely and accurate way to investors

In almost countries all over the world, enterprises which want to stick upstock have to have the support of intermediary organizations – stock companies.Basically, the activities of advising to stick up in countries aim to help enterprises tosuccessfully participate in stock markets In spite of the different levels ofdevelopment of stock markets, the requirement for sticking up in each country is notsimilar However, in general, advising to stick up is the activity which stockcompanies basing on professional skills and knowledge about laws, the requirementfor sticking up… in order to assist enterprises having the needs of register theirstock at Stock Trading Department in a quick and convenient way

During the process of advising to stock up, stock companies supplyfollowing services to enterprises:

- To advise benefits when enterprises do the activity of sticking up

- To advise to build the route of sticking up and assess the time to stick upwhich enterprises gain the most benefits

- To advise about the conditions of sticking up, supporting enterprises insatisfying the demands of sticking up promulgated by Stock Trading Department

- To advise to build the documents of sticking up in order to ask permission

of Stock Trading Department

- To advise to assess the beginning price for the first day of trading in StockTrading Department.

1.2.3.6 Advising to trade and merge enterprises

In 21stcentury, ininternational economy, there are waves of trading andmerging enterprises in heterogeneous ways and large scale which haven’t happenedbefore These waves not only happen in the developed countries but also expand indeveloping countries like China, India, Korea and so on

So, what do trading and merging enterprises (M&A) (“Merger” and

“Acquisition”) mean? There are 2 definitions which are accepted at this present time:

Enterprises merging: “One or some similar companies (called “mergedcompanies”) can merge with another company (called “merging company”) throughmoving all property, rights, responsibilities and legal benefits into mergingcompany, coinciding with ending the existence of merged company”

Enterprises trading: “one company (call “target company”) is bought byanother company” Trading companies can be done in a harmonious way (2companies negotiate together to combine) or in a rival way (target company isreluctant to be controlled by another company)

When supplying the services of advising M&A, stock companies willsupport enterprises in:

- Determining the strategies and aims of selling, buying and merging enterprises

- Surveying and valuing enterprises

- Building the projects of selling/buying or merging enterprises

- Organizing the negotiation of clauses in the contract with partners

- Advising about legal procedures linked to the process of trading ormerging enterprises

1.3 Developing the activity of enterprise financial consultancy of stock companies

1.3.1 The standpoints about developing the activity of enterprise financial consultancy

Besides playing a key role in activities of stock companies, the activity ofenterprise financial consultancy is determined to be a core field in the strategies todevelop companies Therefore, the activity of enterprise financial consultancy needs

to be develop not only the number but also the quality

The development about the number is showed through the heterogeneity ofkinds of consulting services, with the aim of meeting the financial or relevantlyfinancial demands of different kinds of enterprises, career or scales Thedevelopment about the number is represented through indicators: the number ofconsulting contracts, the number of services of enterprise financial consultancyand so on

By contrast, the development about quality is showed through supplyingenterprise financial consultancy sufficiently, comprehensively and followingstandards, thereby guaranteeing the righteousness and objectiveness, meeting thedemands about quality standards and rate of progress This requires stockcompanies to have to possess members of staff who are trained carefully, to beexperienced and worked in stock companies and financial organizations for a longtime In addition, the development about quality is represented through indicators:the improvement of consulting process, the value of trade name, turnover, marketshare, contribution to the economy and stock markets…

1.3.2 Criterions to assess the development of the activity of enterprise financial consultancy of stock companies

Assessing any activities in general and financial consultancy activities inparticular has to base on 2 criterions: qualitative criterion and quantitative criterion

Through assessment of 2 aforementioned criterions, stock companies willbetter their activity of enterprise financial consultancy following the directions ofimproving and exploiting strengths as well as decreasing weaknesses

1.3.2.1 Qualitative criterions

Improving the consulting process

The development of the activity of enterprise financial consultancy isshowed though the improvement of consulting process Furthermore, consultingactivities are not only done only in some skills, they have to have the heterogeneity

of kinds of services, the professionalization in consultancy and meet all demands ofstock markets

Contributing to the economy and the development of stock markets

To assess the effectiveness of the activity of enterprise financial consultancy,besides profit for stock companies, it is important to assess the aspect ofcontributions to the economy The activity of enterprise financial consultancy isefficient when it can help the government to effectively tackle the problems aboutfinance for enterprises through stock markets, problems about workforce, theequitization of governmental enterprises and the development of stock markets

Improving organization and personnel of enterprise financial consultancy

If stock companies want to run the activity of enterprise financialconsultancy, they need to possess members of staff who are high-quality andexperienced in the field of finance and stock markets In addition, organizing andarranging the unit of enterprise financial consultancy play a key role in helping todevelop the activity of enterprise financial consultancy This is a vital unit whichneeds to specialize skills In contrast to other departments in stock companies,Enterprise Financial Consultancy Department is usually organized into smallergroups, being divided following the complicated characteristics of supplyingservices as well as determining the different responsibilities between customerrelationship unit and service applying unit

1.3.2.2 Quantitative criterionsIncomes from consulting services

The earnings from consulting services can be monthly profit, quarterly profit

or annual profit Nevertheless, because each consulting contract from concluding tofinishing usually last approximately 2 or 3 months hence stock companies usually

assess their profit targets by a quarter The higher profit targets are, the moreeffective consulting activities are Furthermore, with the aim of comprehending thequality of services and added value which stock companies created for oneconsulting contract high or low, they usually calculate the average profit above oneconsulting contract.

Market share of the activity of enterprise financial consultancy

The market share of the activity of enterprise financial consultancy is anorm which represents the incomes from the activity of enterprise financialconsultancy of a stock company above the total incomes from the consultingactivities brought about by markets to stock companies The higher this norm is,the more high-quality consulting activities of companies are, thereby drawingmore contracts with large value

The number of consulting contracts

The number of consulting contracts makes a contribution to showing whether

or not this activity can be deployed effectively, whether or not the number ofcontracts are regular and increase annually Besides representing the quality ofconsulting activities, the norm of the number of consulting contracts also show thatwhether stock companies established a large net of customers or not and whethercustomers are supported well after consultancy or not

The heterogeneity of career and kinds of enterprises

The development of the activity of enterprise financial consultancy is alsoshowed through fully supplying services for all kinds of enterprises in manifoldcareer Besides popular services for share companies like advising to release,advising to stick up and so on, stock companies also have to supply consultingservices to limited liability companies like advising capital equitization, advising tochange models, releasing bonds…

Furthermore, parallel with supplying the services of enterprise financialconsultancy to manufacturing and trading enterprises in common fields, stockcompanies also have to supply services to trading enterprises in special fields and

the value of enterprises is mainly intangible value like enterprisesprocessingsoftware or architecture.

The heterogeneous kinds

Depending on the scale of each stock company as well as the ability andknowledge of the consulting members of staff, stock companies will choose theirkey consulting services, supply all services or only partial services However, theheterogeneity of kinds of consultancy shows the development of stock companies.Besides supplying common services of financial consultancy like advising torelease, stick up, auction…, a stock company can be regarded as an adept company

in enterprise financial consultancy when it can supply high-value and premiumconsulting services like advising to assess the value of enterprises, releasing bonds,restructure, M&A and so on

1.4 Factors helping to develop the activity of enterprise financial consultancy

of stock companies

1.4.1 Objective factors

The legal frame and policy of the government

This is the factor which directly influences on enterprise financialconsultancy of stock companies The consulting activities of stock companies areonly employed and operated in the range of legal frame and policy of thegovernment Possessing a full and comprehensive system of legal documents canmake a contribution to supporting stock companies in developing their activities ingeneral and enhancing the activity of enterprise financial consultancy in particular

By contrast, if the law system is incomplete and inappropriate, it can be the factorwhich impedes the development of consulting activities Furthermore, consultingactivities are easy to bring about conflicts between customers and stock companies,therefore it is vital to have strict and comprehensive rules to constrain conflicts orquickly address conflict issues if conflicts happen

The development of stock markets

Stock markets which develop prosperously can create the basis for thedevelopment of activities of stock companies Moreover, the activity of enterprisefinancial consultancy is not out of this rule When the stock markets develop, theneeds of using consulting services will be created because at this time, the needs ofmedium-term and long-term capital equitization also account for the largeproportion of capital markets In other words, stock releasing enterprises andorganizations will need a number of activities like advising to release, advising tostick up, equitization and so on.

The perception of customers about the activity of enterprise financial consultancy

To exist and develop, the activity of enterprise financial consultancy or anyconsulting activities need to have interactions between service consulting units andservice using units Accordingly, stock companies have to base on the requirement

of customers in order to supply their customers in the best ways By contrast, thecomprehension of enterprises utilizing financial consulting services about theirneeds is of paramount importance Enterprises have to comprehend the strengths ofusing consultancy, the benefits which services can bring about, whether or not thecost of services is suitable for the results which they achieve When enterprisesusing services have full perception about the importance of services, these servicescan exist and develop

The competition in internal branches

Increasing the establishment and development of stock companies gives rise tothe keen competition among stock companies The stiff competition encourages stockcompanies to supply better services to customers, to broaden their knowledge and betterskills Competition can help to eliminate weak stock companies, coinciding withbringing about market share to potential stock companies which supply the best services

1.4.2 Subjective factors

The points of view of the leaders of stock companies about the development

of the activity of enterprise financial consultancy

The perspective of the leaders of stock companies about the activity ofenterprise financial consultancy is represented in policies of companies for thisactivity If the policies of company focus on and prioritize the development of theactivity of enterprise financial consultancy, this activity will have manyopportunities to be developed In addition, it is showed in choosing core consultingservices like advising to release, advising to stick up and advising to equitize,coinciding with showing the potential groups of customers of stock companieswhich stuck up or have not stuck up, small enterprises or conglomerates whichequitized or have not equitized For each consulting subject, stock companies willhave policies to approach them as well as announce levels of expenditure.Therefore, the policies of stock companies are conditions for the development of theactivity of enterprise financial consultancy

The qualifications of personnel

Manpower is an important factor influencing the quality of stock companies,especially the activity of enterprise financial consultancy Because this activityrequires personnel to have to possess much experience while the ability of workingand professional etiquette are top-ranking factors Accordingly, human beings arethe key factor predominantly impacting on the success and failure of companies Inorder to provide services in the best ways, companies not only demand proficientconsulting personnel but also require much ability of companies’ leaders sincefinancial consultancy is intangible products and the success of services will bemeasured through the satisfaction of customers

The prestige of stock companies

The prestige of stock companies in markets is illustrated through the stablenumber of customers, the speed increase of market share and incomes fromactivities In order to boost the prestige of companies in the market, they need tohave copious factors belonging to themselves like: the ability, the prestige ofleaders, the running experience, the quality of services, the qualifications ofpersonnel and so on It seems that customers always find prestigious stockcompanies in order to consult because the needs of enterprises in consulting

activities are vital and linked to the development of enterprises like equitization,sticking up, increasing capital and so on.

Capital capacity

Although the activity of enterprise financial consultancy of stock companiesdoes not require legal capital, the capital capacity of stock companies is still anindispensable factor to improve the development of the activity of enterprisefinancial consultancy due to the following reasons:

- The potential capital capacity can assist stock companies in raising the prestige

of companies and the belief of customers because when companies meet the requirement

of legal capital, they can provide all services following statutory provisions

- The stable financial capacity also aids stock companies to operatesustainably during the difficult period of the market Furthermore, it createsopportunities for stock companies to participate in contracts about underwriting orworth contracts

The ability of approaching customers

Possessing the large network of customers and the multifarious kinds ofcareer and scale can greatly assist the unit of enterprise financial consultancy in theprocess of finding and approaching potential customers This is huge and essentialproperty of stock companies attaining after many years supplying services in stockmarkets Besides, the ability of approaching customers bases on the trade name andthe prestige of stock companies in the markets because the rate of success will beachieved more and stock companies are easy to approach customers and negotiatewhen customers believe in stock companies

CHAPTER 2: THE REALITY OF ACTIVITIES OF ENTERPRISE

FINANCIAL CONSULTANCY IN VIETINBANKSC

2.1 The background ofVietinBankSc

2.1.1 The process of establishment and development

Vietnam Bank for Industry and Trade Securities Joint Stock Company(VietinBankSc) have previous name Vietnam Stock Bank for Limited LiabilityCompany was established following the Decision number 126/QĐ-HĐQT-NHCT1

in the day 09/01/2000 of Board of directors of Vietnam Industrial and CommercialBank, having 55 billion vietnamdong of share capital, trading in the fields of stockand supplying the services of financial consultancy

To be one of the first seven stock companies established in Vietnam,VietinBankSc is a company travelling with the development of Vietnam stockmarkets in first steps

Since the day 07/01/2011, Vietnam Stock Bank for Limited LiabilityCompany changed their operating model into Vietnam Bank for Industry and TradeSecurities Joint Stock Company basing on the establishing and operating licensenumber 107/UBCK-GP issued byState Security Commission of Vietnam in07/01/2011

In 07/31/2011, VietinBankSc stuck up in Hanoi Stock Trading Departmentwith the stock code “CTS” This is the important watershed of company with theaim of widely promoting the image of VietinBankSc and showing the determination

of enhancing the quality of operation and the obviousness of information

Hitherto, legal capital of VietinBankSc is 789,934,000,000 vietnamdong.Attaining the supporting of trading network of Industrial and Commercial Bank allover the country, VietinBankSc have possessed experienced, dynamic and clear-headed personnel as well as had the operating network expanding all the wholenation, including 1 main headquarter, 1 affiliation in Hochiminh city, 2 trade officesand 97 trade supporting offices all over Vietnam

VietinBankSc always prioritizes the advantages of customers and builds thebelief of customers basing on the quality of professional services VietinBankScbecame the prestigious address for not only enterprises which have requirementabout financial consulting services, releasing stock, equitizing capital but alsoinvestors and individuals who want to seek opportunities of investment throughstock markets by supplying services:

- Mediating stock

- Underwriting releasing stock

- Advising to invest in stock

- Depositing stock

- Advising finance for enterprises

2.1.2 The structure of personnel

The number of members of staff of VietinBankSc at the day 12/31/2016 is

118 members

Table 1: The structure of personnel of VietinBankSc in 12/31/2016

The policy to develop human resources

One of huge achievements of VietinBankSc during the period of 15 years ofdevelopment is to build the dynamic and proficient members of staff From theoutset of establishment, VietinBankSc focused on the building and developing theirpersonnel to become experienced, proficient, loyal and devoted with the developingaims of all company Specially, VietinBankSc concentrated on the leading system inorder to improve and enhance the strengths of human resources

The policies of salaries, rewards and welfare

To maintain experienced personnel and attract talents, besides public and clearpolicies of recruitment, VietinBankSc always focus on building treatment policiesattracting workers like salary, rewards and welfare in order to enhance productivityand working effectiveness of each individual In the year 2016, VietinBankSc appliedand paid salaries to employees following KPIs, attaching earnings to productivity andworking effectiveness of employees In addition, for trade units, VietinBankSc hasappropriate and timely treatment policies in order to exhort and encourage workers toincessantly devote themselves to the development of all company

Furthermore, this company focus on the policies of salaries, rewards and otherwelfare like periodically examining health for personnel, the policy of giving birth and so

on in order to show the care of company to employees anytime and anywhere

2.1.3 The structure of organizations

Picture 1: The structure of organizations of VietinBankSc

sources: Annual reports inthe year 2016 of VietinBankSc

2.1.4 The results of trading activities of VietinBankSc

2.1.4.1 The background of stock markets

Advantages

- The policy of developing stock markets of the government

Developing stock markets is always focused on and to be the leading target

in recent years This target is concretize by the government in followingdocuments: the Decision number 128/2007/QĐ-TTg of the day 08/02/2007 aboutratifying The project of developing Vietnam capital markets to the year 2012 withthe vision to the year 2020; the Decision number 252/2012/QĐ-TTg of the day13/11/2012 about ratifying The strategy to develop Vietnam stock markets duringthe period 2013 to 2020 and the Decision number 366/QĐ-TTg about ratifyingThe project of building and developing Vietnam derivative stock markets Withgeneral and long-term solutions in order to develop stock markets in a stable andsustainable way, to increase the scale and quality of activities, to diversifyproducts and skills, to guarantee the effective operation of markets, to preventmany risks and to become the important channel of medium-term and long-termcapital mobility of the economy

Strategies to develop stock markets during the period of 2013 to 2012 wereshowed that there are needs to boost the scale, the deep and the liquidity of stockmarkets, to endeavor to increase the total capital of stock markets to account for 70percent of GDP in the year 2020, to make bonds markets to become an importantchannel to mobilize and allocate capital of the economy, to diversify investors, todevelop the system of organizing investors, to encourage long-term foreigninvestment and to train individual investors

Furthermore, the legal grounds for stock markets are getting better In fact,the year 2006 marked the important watershed in improving legal framework forstock markets through the fact that Parliament ratified Stock Law number70/2006/QH11 Hitherto, the stock system of legal documents is being improvedand to be relatively adequate, appropriate for the reality of Vietnam Governmental

offices like the government, Ministry of Finance, State Security Commission ofVietnam… ratified legal documents guiding about equitization, share auctioning,releasing and sticking up stock… In addition, documents of announcinginformation, fining administrative infringements… have a part in supporting stockmarkets to operate efficiently and clearly

Therefore, with the interest of the government and relevant departments aswell as the improvement of legal basis, Vietnam stock markets have initial essentialconditions to develop and become a powerful stock market and initiatively integrateinto international stock markets

- The government boost the re-structure of governmental enterprises

The project of restructure of governmental enterprises focusing onconglomerates and governmental companies in the period of 2014 – 2015 wasratified in the day 07/17/2014, attaching the Decision number 929/ QĐ-TTg.Following that, fundamental missions were determined, including:

- To re-locate the roles and narrow the range of trade of governmentalenterprises

- To boost equitization and diversify the proprietary of governmentalenterprises which the government needn’t possess 100 percent of proprietary.For each economic corporation, governmental corporation, to do the re-structure

of the list of investment and trade career, to focus on main trade career To boostthe performance of divesting capital which invested in fields not belonging tomain trade

- To renovate, develop and fully apply the modern administering framefollowing the general rules of market economy for conglomerates and governmentalcorporations

- To strictly abide by the rules and administrative laws of markets, toinnovate the lever system in order to ensure that governmental enterprises will runfollowing the market mechanism and equally compete the same enterprises being ofother economic components

For stock companies, stepping up re-structure can assist to develop skills ofenterprise financial consultancy, specially skills of equitization and advising toauction stock.

- The stock markets are recovering step by step

The stock markets in the period of 2014 – 2016 are gradually recovering from thebottom The indicator VN-Index at the end of the year 2016 increased 55.2% comparedwith that at the end of 2013, 545.63 and 351.55 scores, respectively Moreover, theindicator HNX-Index grew from 58.74 scores at the end of the year 2013 to 82.98 scores

at the end of the year 2016 (increasing approximately 41.3%)

Besides the recovery of indicators, the trade scale of markets also recovered,being parallel with the liquidity of markets The average value of transaction was2,479 billion dong/turn in 2011, diminishing to 650 billion dong/turn in 2013(plummeting roughly 281.3%) After that, the liquidity of markets commencedrecovery from the year 2014 to 2016, the average value of transaction was 2,971billion dong (rocketing 357.1% comparing with that of the year 2013)

Picture 3: The average value of transaction in 2011 – 2016

0 500

Sources: From State Security Commission of Vietnam

It seems that the recovery of stock markets in this period considerablyinfluenced on the activities of equitization, releasing and sticking up of enterprises.Companies commenced to deploy equitization and releasing because in thebackground of increasing the cost of stock and the money stream into the markets,the success of releasing and capital surplus can be successful It is parallel to

boosting the activity of sticking up stock of enterprises Even though for the aspect

of finance, when enterprises stuck up, the cost of stock does not directly impact onenterprises but it can influence on the prestige and trade name of enterprises as well

as the benefits of shareholders in enterprises

For stock companies, all trading skills attach the volatility of stock markets.When stock markets recover, increasing liquidity can help the mediating activities

to develop, coinciding with the advantages of private trade The activity ofenterprise financial consultancy lies in common laws and have multitudinousadvantages when the needs of equitization, releasing and sticking up soar

- The stock markets more and more bring into play the role of mobilizing capital for the economy

Vietnam stock markets have opened up for nearly 15 years Although this isonly short time in comparison with the history of the running time of internationalstock, our stock markets have gradually become a top channel of mobilizing capitalfor the economy in general and for enterprises in particular Through the activity ofmobilizing capital, stock markets made a contribution to assisting the governmentand enterprises to mobilize medium-term and long-term capital with the aim ofinvesting, developing and expanding the activities of manufacturing and trading,decreasing the credit burden for bank systems

Picture4: Total capital mobilized through stock markets

0 50,000

The interest of enterprises and investors in stock markets

Playing a role in being a channel of mobilizing medium-term and long-termcapital for the economy, stock markets more and more draw the attention ofenterprises and investors This is showed through the number of sticking upcompanies and the increasing level of market capitalization year by year

- The rocketing of the number of sticking up companies

In the first transaction in the day 07/20/2000, there are only 2 stocks stuck upincluding REE and SAM At the end of the year 2016, the number of stocksescalated to 673 stocks (it can be seen in the Picture 3)

Prime Minister ratified the Decision number 51/2016/QĐ-TTg whichstipulated some regulations about divesting capital, selling shares and registeringtrade and sticking up in stock markets of governmental enterprises, includingstipulation during one-year maximum period from the day being issued certificates

of registering enterprises; enterprises which equitized have to add documents inorder to improve procedures of sticking up in Stock Trade Department followingthe rules about stock and stock markets This is a decision showing the highlypolitic determination to develop stock markets

Picture5: The number of sticking up companies in the period of 2000 – 2016

647 710 704 683 673

Companies

Sources: From Hanoi Stock Exchange and Ho Chi Minh Stock Exchange

- Market capitalization of markets has rocketed through each year

The development of Vietnam stock markets is also lively showed through themarket capitalization through each year In comparison with 17 years ago, the scale

of markets sharply rocketed from 1 thousand billion dong in 2012 to 1,156 thousandbillion dong in 2016 Market capitalization in first 6 years was under 1 percent ofGDP but in the period of 2006 – 2016, it dramatically soared, especially that of theyear 2007 was 43 percent of GDP (it can be seen in the Picture 7) At the end of theyear 2016, Vietnam market capitalization was approximately 1,128,000 thousandbillion dong (31.5% GDP)

Picture 6: Market capitalization in the period of 2000 – 2016

491.0 225.0

620.0

741.3 556.7 797.6 964.0 1128.0

Thousand billion dong

Sources: From State Security Commission of Vietnam

Therefore, through the activities of mobilizing capital of enterprises and thesuccess of sticking up in stock markets as well as other benefits brought by stockmarkets like promoting trade name and prestige of enterprises, enhancing theliquidity for stocks, enhancing administering abilities… so the perception ofenterprises changed a lot In the previous time, government offices canvassedenterprises, even utilized fining methods to enterprises which did not bare theirresponsibilities like announcing information This is no longer the case Up to now,abundant enterprises have been self-aware to do their aforesaid responsibilities andapproach aims in order to meet the requirements about releasing and sticking up