annualreport2009 hanoi stock exchange sở giao dịch chứng khoán hà nội

Message from the Chairperson of the Board 4 CEO’s Letter 5 Highlights of 2009 6 About HNX 7HNX Markets 16Listed Securities Market 17 Market for Unlisted Public Companies UPCoM 23 Governm

HANOI STOCK EXCHANGE

Address: 81 Tran Hung Dao, Hoan Kiem, Hanoi

HNX Hanoi Stock Exchange

SSC State Securities Commission

PPC Party Central CommitteeABBREVIATIONS

Message from the Chairperson of the Board 4 CEO’s Letter 5 Highlights of 2009 6 About HNX 7

HNX Markets 16Listed Securities Market 17

Market for Unlisted Public Companies (UPCoM) 23 Government Bond Market 26 HNX Activities 30Management of Listing and Trading Registration 31

Trading Surveillance 33 Member Management 34 Information Disclosure 37 Information Technology System 38

Share Auctions and Bond Biddings 39 International Cooperation 42 2010 Targets 43 Appendices 45

Dear Readers, The year 2009 elapsed in the context of Vietnam’s determined efforts to overcome difficulties in the wake of the global economic recession The nation’s gross domestic product (GDP) growth rate in 2009 hit a 10-year low, while the prices of oil, gold and US dollars were highly volatile Meanwhile, macroeconomic balances experienced some swings despite the Government’s opportune adjustments to help fight the economic downturn and prevent high inflation, as experienced in 2008, returning These measures were accompanied by the active implementation of sound financial and monetary policies Vietnam’s securities market, after a period of hibernation, began to rebound while constantly facing new challenges

As for the HNX, 2009 was considered an important milestone It was in 2009 that the HNX, for the first time, commenced operations as a wholly State- owned limited company governed by a Board of Directors Given this change

in operating model, HNX was entitled to more self-control so that it could call into play its resources in organizing and regulating market activities

In this new model, HNX has brought market expansion and technological improvements on a large scale into sharp focus, steadily improving the working conditions of its staff and getting well prepared for market growth

as the economy enters a recovery and development stage.

In 2010, for sustainable growth, HNX is to make a thorough appraisal of the market development process during 2005-2010 within the framework of the Vietnam Securities Market Development Masterplan, hence mapping out an overall development strategy for the HNX during 2011-2020 HNX’s major undertaking during 2010 is, therefore, to consolidate three existing markets, upgrade technological systems, open online trading, ameliorate corporate governance in accordance with the new operating model and promote international integration.

We believe with the implementation of the aforementioned measures accompanied by sound management of regulators, the support and confidence

of member securities firms, listed companies, partners and investors, HNX’s management and staff will make every effort to successfully implement the

2010 plan and work together to bring the Exchange to new heights.

MESSAGE FROM THE CHAIRPERSON OF THE BOARD

Cordially,

Vu Thi Kim Lien Chairperson

in accordance with Decision No.01/2009/QĐ-TTg by the Prime Minister; opening the market for securities of unlisted public companies (UPCoM)

to get public companies to trade their stocks on a State-regulated market and narrow the grey market, launching a new trading system tailored for specific trading requirements of Government Bonds and in conformity with international conventions In 2009, the HNX continued to provide support for businesses and approved the listing of 95 companies By the end of 2009, there were 257 companies listed on the HNX with a total listing volume

of 3.7 billion The listed market showed an increase of 71% in terms of listed stocks,148% in market capitalization and 245% in trading values In addition, the HNX in 2009 tested its online trading system so it could be fully implemented in February, 2010.

By means of this Annual Report, we would like to once again express our appreciation to authorities, investors, market participants and colleagues for your close cooperation in developing the market throughout the past year

It is our strong belief that the complete support and effective management

of the Party and State leaders, Government agencies, Ministry of Finance, Hanoi People’s Committee as well as related bodies in combination with the growing interest of businesses, market participants and investors will all greatly contribute to the growth of the securities market and make it an important impetus for the country’s sustainable development.

CEO’S LETTER

Respectfully,

Tran Van Dzung CEO

2/1/2009 Prime Minister Nguyen Tan Dung issues Decision No 01/2009/QĐ-Ttg on the establishment of the HNX on the basis of transforming HASTC as an income-generated State agency into a State-owned, single-member limited liability company.2/1/2009 The first trading session of 2009 is opened in the presence of the Hanoi People’s Committee Chairman, SSC Division Directors and representatives of market participants.

2/2/2009 Mr Vu Van Ninh, Member of PCC, Deputy Minister of Finance, visits HASTC and opens the first trading session of the Lunar New Year The Minister wishes Vietnam’s securities market a new year of considerable and solid achievements, making

important contributions to the development of the country’s socialist-oriented market economy

20/3/2009 The first auction of sovereign bonds issued by the State Treasury is successfully organized to raise capital for key Government projects in accordance with Decision 211/QĐ-TTg by the Prime Minister which paves a new way for capital mobilization In

2009, over USD$460 million was raised via six biddings

30/3/2009 A Memorandum of Understanding is signed with International Finance Corporation (IFC) for joint initiatives to improve information disclosure and transparency of UPCoM and the bond market.

The head office and the trading system is moved to 81 Tran Hung Dao Street, ensuring the stable, safe and continuous operation

of the market

30/4/2009 A Memorandum of Understanding is signed with Debt and Asset Trading Corporation (DATC) to promote cooperation in share auctions, bond listing, registration and listing of stocks of DATC members.16/6/2009 The inauguration of the HNX and the launch of market for stocks of unlisted public companies (UPCoM)

24/6/2009 HNX’s Chief Executive Officer signs Decision No 410/QĐ-SGDHN, promulgating regulations on Government Bond trading, organization and management of Government Bond trading on the HNX This helps to streamline rules and regulations,

facilitating the implementation of a specialized Government Bond trading system

16/07/2009 The specialized Government Bond trading system is officially launched, meeting specific Government Bond trading requirements in line with Vietnam’s Securities Market Development Plan and international conventions

24/9/2009 The HNX together with The Vietnam Investment Review holds a ceremony to honour Businesses of the Year on the occasion of Vietnamese Businessmen’s Day The honour is conferred on nearly 50 institutions being listed companies, member securities

firms and bidding members of the HNX

12/10/2009 Trading volumes reach a peak of 67,237,200 shares, which gained VND3,048,981,570,000 in value

23/10/2009 The 1,000th trading session takes place in the presence of the SSC Chairman and other market participants

18/11/2009 The HNX implements its first online trading test with the participation of 93 member securities companies

16/12/2009 The HNX implements its first online trading test with the participation of 93 member securities companies

HIGHLIGHTS OF 2009

The HNX came into operation on the basis of transforming the HASTC,

an income-generated State agency founded pursuant to Decision

No.127/1998/QD-TTg dated July 11, 1998, into a State-owned,

single-member limited liability company according to Decision No 01/2009/

QD-TTg

n Vietnamese name: Sở Giao dịch Chứng khoán Hà Nội

n English name: Hanoi Stock Exchange

n Abbreviated name: HNX

n Website: www.hnx.vn

by HASTC and supplemented during the operation

- To organize stock listings and trading on the HNX as required by laws

- To supervise the compliance of trading members, listed companies and investors

- To act as an intermediary when requested to settle any disputes related

to securities traded on the HNX

- To provide technical infrastructure, information and training services

in the exchange’s duties and authorities for the development of the stock market

HNX

Primary Market Secondary Market

(UPCoM)

GovernmentBond Market

HNX MARkET STRUCTURE

n Listed Securities Market, launched on July 14, 2005, is the market for listed securities of eligible companies according to Article 9, Decree No

14/2007/NĐ-CP dated January 19, 2007 by the Government, detailing some articles in the Securities Law Commodities on the Listed Securities Market are stocks of listed companies

n Market for Unlisted Public Companies (UPCoM), launched on June 24, 2009, is organized for unlisted public companies (UPCoM) based on The

plan on UPCOM Organization and Trading Regulation approved by the Ministry of Finance upon Decision No 3567/QĐ-BTC dated November 8,

2007, and Decision No 108/2008/QĐ-BTC dated November 20, 2008 Commodities in this market include stocks and convertible bonds of unlisted public companies or delisted companies

n Government Bond Market, which went live on September 24, 2009, is the market for Government Bonds according to Decision No 46/2008/

QĐ-BTC issued by the Ministry of Finance on July 1, 2008 Commodities are Government Bonds, municipal bonds, bonds guaranteed by the Government

SUPERVISORY BOARD

Internal AuditDept AdministrationDept General & LegalAffairs Dept Human ResourcesDept Accounting Dept.Finance &

Dept Information Dept Market Technology Dept.Information

Regulation Dept SurveillanceDept

Strategy &

InternationalCooperation Dept

Ms Vu Thi kim Lien

Chairperson of the Board

Ms Vu Thi Kim Lien holds a degree from the Foreign Trade University, a Master degree in financial economics from the University of London (UK) and a Ph.D degree from the Banking Academy of Vietnam She is a member of many foreign and domestic forums on macro-economic development strategies, regional economic restructuring and enforcement on the stock market She has more than 20 years’ experience in banking and finance.

Previous positions:

- Vice Chairman of the Capital Market Research Board of the State Bank of Vietnam (1993-1997)

- Director of Departments at the SSC (1997-2005)

Current principal position outside the HNX: Vice Chairman of the SSC since 2006.

Mr Tran Van Dzung

Vice-Chairperson, CEO

Mr Tran Van Dzung holds a degree from the Diplomatic Academy, and a Master degree in Market Development Research from Saitama University, Japan He has nearly 20 years’

experience in finance and banking

Previous positions:

- Working at the State Bank of Vietnam 1997) and SSC (1997-2003)

(1992 HASTC Director (2003 (1992 2009) Current position: Vice-Chairman and HNX CEO since June, 2009

Mr Dao Viet Anh

Member of the BOD

Mr Dao Viet Anh graduated from the

Academy of Finance He has a Master degree

in economics and public administration from

Brussels University, Belgium

Previous positions: Deputy Head, Head of the

Capital Market Division, at the Ministry of

Finance’s Finance and Banking Department

(before January, 2009)

Current principal position outside the HNX:

Deputy Director of the Ministry of Finance’s

Finance and Banking Department.

Mr Nguyen Van Dzung

Deputy CEO

Mr Nguyen Van Dzung graduated in business administration from the mini MBA program in Thammasat University, Thailand He has nearly

20 years’ experience in finance and banking

Mr Nguyen Vu Quang Trung

Member of the BOD, Deputy CEO

Mr Nguyen Vu Quang Trung graduated

in finance and banking from the National

Economics University He has completed a

Master degree in Finance and Banking from the

University of New South Wales, Australia

Previous positions:

- Working at the State Bank of Vietnam

(1996-1997) and SSC (1997-2004)

- Head of Divisions at HASTC (2004-2006)

- HASTC Deputy Director (2006-2009)

Current position: Member of the BOD and

HNX Deputy CEO since June, 2009.

Mr Nguyen Tien Dzung

Member of the BOD, Head of Supervisory Board

Mr Nguyen Tien Dzung holds a degree in international economics from the National Economics University

- Head of HASTC’s Administration Division (2006-2009)

Current position: Head of the HNX’s Supervisory Board since June, 2009

General and Legal Affairs Dept.

Nguyen Thanh Tung

Deputy Director

Surveillance Dept.

Nguyen Hoang Linh

Director

Strategy & International Cooperation Dept.

Nguyen Thi Thu Ha

Director

Trading Dept.

Vu Thi Thuy Nga

Director

Market Information Dept.

Tran Anh Tuan

Director

Bond Market Dept

Human Resources Dept.

Nguyen Thi Tam

Deputy Director

Finance and Accounting Dept.

Tran Bich Thuy

Director

Internal Audit Dept.

Nguyen Anh Phong

Director

Listing Dept.

Nguyen Tuan Anh

Director

Member Regulation Dept.

Tran Anh Tuan

Deputy Director

Administration Dept.

14

Markets

LISTED SECURITIES MARkET

Regulations on Listed Securities Market

* Business operations in the year immediately preceeding the

year of registration for listing must have been profitable There

must be no debts overdue for more than one year;

* Fulfilling other requirements of Decree

No.14/2007/NĐ-CP dated January 19, 2007.

• For bonds:

* Being a joint stock company, limited liability company or

State-owned enterprise having a minimum charter capital of

VND10 billion;

* All bonds of one issue must have the same maturity date;

* Fulfilling other requirements of Decree

No.14/2007/NĐ-CP dated January 19, 2007.

Trading time:

From Monday to Friday, except for public holidays stipulated

by the Labor Code.

Tick size:

• Continuous order matching method:

+ For stocks: VND100.

+ For bonds: no tick size.

• Negotiation method: no tick size.

Trading unit:

* For continuous order matching: a round lot (100 shares) or VND10 million of bonds at par value.

* For negotiation method: no trading unit

* For trading odd lots, investors are entitled to require member securities companies to buy back stocks at the negotiated price, which by no means exceeds the collar applied at the HNX.

Minimum trading volume

(exclusively applied for negotiation method)

* For stocks: 5,000 shares.

* For bonds: VND100,000,000 at par value.

Reference price of a stock:

* Reference price of a stock is the weighted average of all executed prices by continuous order matching method of the previous trading day.

* Collar (for a stock in a trading day).

* Collar applied for a stock in a trading day is ±7% The collar is subject to specific market situations under SSC’s decisions.

* No collar is applied for bond trading.

Trading method: Both continuous order matching and

negotiation methods are applied.

0 50 100 150 200 250

0 50 100 150 200 250

to capital investment and capital transfers till the end 2009

HNX-Index & TRADING VOLUME IN 2009

Jan 2009: The Government announces the USD$1 billion stimulus package

24/02: HNX-Index bottoms at 78.06 points

HNX-listed stocks saw robust growth in scale and liquidity By the end of 2009, there were 257 stocks from companies of many industries listed with a total listed value of over VND37,120 billion and market capitalization of over VND125,379 billion, an increase of 71% and 148% compared to 2008 respectively Finance, banking and industrial firms accounted for nearly 70% of total listed companies with approximately 80% of total listed values

In trading activities, the global economic recession beginning in 2008 continued its impact on HNX’s trading activities with successive declines

in the first two months of 2009 The situation then improved together with the recovery of Vietnam’s economy From the bottom of 78.06 points

in February 2009, the HNX-Index reached 167.17 points on December

31, 2009 Trading volumes and values increased remarkably especially

in October and November, taking up 33% and 39% of trading volumes and values in 2009 in total respectively On October 23, 2009 the HNX stock market enjoyed record trading volumes and values at 67.24 million shares and VND3,049 billion, respectively

The total trading volume in 2009 was 5,760 million shares with an average trading volume of 23 million shares/session (an increase of 276% compared to 2008) and the total trading value was VND197,358 billion, with an average trading value of VND790 billion/session (an increase of 245% compared to 2008)

Foreign investors became more active in HNX trading Trading volumes

by foreign investors in 2009 reached nearly 277 million shares, increasing 138.19% against 2008

LISTED STOCk MARkET 2009 IN REVIEw

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec.

05001,0001,5002,0002,500

Average Trading volume Average Trading value

Trading volume and Trading value in 2009

Trading volume and Trading value by trading mode

050100150200250300

05001,0001,5002,0002,5003,0003,5004,000

Listed company Listed volumeJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Listed companies and Listed volume in 2009

Stocks with biggest average trading volume 5 biggest gainers of 2009

31/12/2008

Average price on 31/12/2009

Change (VND/

share)

Change(%)

Commodities traded on the UPCoM include stocks and

convertible bonds of unlisted or delisted public companies

Eligibilities for UPCoM registration:

> Public companies having unlisted or delisted securities;

> Public companies having registered and deposited securities

at the Vietnam Securities Depository;

> Public companies receiving the assistance of a member

securities company.

Trading methods on UPCoM: Negotiation methods include

conventional and electronic negotiations.

Trading unit, trading volume, tick size and collar:

- Trading unit: no trading unit applied.

- Trading volume: minimum of 10 stocks and bonds.

- Tick size: 100 for stocks; no tick size for bonds.

- Collar: ±10% for stocks, no collar for bonds.

Trading time on UPCoM: Investors can trade via a securities

company at any time during the working days stipulated by securities companies Securities companies daily report, verify and settle transactions via the system as regulated by HNX.

Reference price: Reference price of a stock being traded is

the weighted average of all electronic negotiated prices of the most recent trading day There is no reference price for bonds.

Settlement on UPCoM:

- Settlement for stocks: multilateral settlement, T+3.

- Settlement for bonds: multilateral settlement; T+1.

MARkET FOR UNLISTED PUBLIC COMPANIES

(UPCoM)

After nearly three years’ preparation for a legal basis and technological

infrastructure, under the approval of the Ministry of Finance and the SSC,

the market for securities of unlisted public companies officially went live

on June 24, 2009 By December 31, 2009, UPCoM attracted the trade

registration of 34 companies with total charter capital of VND3,274

billion and total market capitalization of approximately VND4,260

billion Trading activities were carried out safely with two trading modes,

namely electronic negotiations (accounting for 90%) and conventional

negotiations (accounting for 10%) More and more foreign investors

participated in the UPCoM UPCoM-Index has the same trend with the

HNX-Index in the listed securities market The HNX transferred 17,878

results to the VSD system for clearing and settlement with a total trading

value of over VND545 billion, equaling VND4 billion per session

0510152025303540

050100150200250300350

Jun Jul Aug Sep Oct Nov Dec

The birth of UPCoM is one step in completing the structure of Vietnam’s

stock market, enhancing the enforcement of the Securities Law with

the registration of public companies, standardizing profiles of public

companies and encouraging public companies to disclose information

and engage in the official market However, UPCoM’s scale and

liquidity was not as expected For the development of this market, the

HNX will study and propose solutions on its systems, regulations and

operations to widen the regulated market and narrow the grey one

UPCoM 2009 IN REVIEw

UPCoM companies and shares registered for trading in 2009

UPCoM-Index and Trading volume since 24/6/2009

UPCoM stocks with biggest trading volume in 2009 UPCoM Trading volume and Trading value by trading mode

(shares)

Trading value (VND mil.)

• Regular member: securities companies doing self dealing

and brokerage activities on the system.

• Non-regular member: commercial banks doing self dealing

- The electronic Government Bond trading system (EBT)

allows for real-time Government Bond trading, integrates a

direct connection to the VSD and facilitates the completion

of bond transactions on the system.

- Trading method: conventional and electronic negotiations.

• Repos characteristics:

- Trading type: Forward transaction with ownership transfer.

- Trading term: minimum 2 days and maximum 180 days.

- Minimum trading volume: 1,000 bonds (VND100 million par value).

- Trading method: conventional and electronic negotiations.

- Trading value: including haircut.

On September 24, 2009, Vietnam’s first Government Bond trading system

was officially put in operation This is a result of more than 4 years’

implementation of a guideline establishing Government Bond trading

market and the realization of a project under Decision No 86/QĐ-BTC

issued by the Ministry of Finance Since the successful implementation

of centralized Government Bond bidding (2006) and Government Bond

listing (2008), all Government Bonds issued through biddings and

underwriting have been traded on a modern Government Bond system

separate from the stock trading system, connected to all members and

in conformity with the development orientation of Vietnam Securities

Market and international practices

The Government Bond trading system was designed with two trading types including outright trading and Repos trading As of December

30, 2009, the system had 30 members, among which 14 non-regular members were commercial banks and 16 regular members were securities companies The total number of listed bond codes was 527 with total value of VND161 trillion, equivalent to 10.8% of GDP In the first 11 months of 2009, the Government Bond trading volume was

838 million bonds with a total value of VND88 trillion and an average trading value of VND8 trillion per month Government Bond trading value trends saw a slight decrease in the last months of the year

GOVERNMENT BOND MARkET OVERVIEw

Listing scale

Trading activities

Government Bond Market Overview

Average trading volume (bond)

activities

Management of listing and trading registration

With the aim to expand the regulated securities market and narrow the

OTC market, the HNX has made significant improvements in the process

of listing and trading registration management so that businesses can get

easier access to securities listing and trading registration

A review of listing dossiers at the HNX is conducted by an appraisal council

consisting of members of the management board and representatives

of functional divisions Potential companies’ dossiers may be directly

submitted to HNX or through advisory groups As stipulated in Decree

No.14/2007/ND-CP, the review and approval of listing dossiers are to be

completed within 30 days from the submitting date However, when applied

to the HNX, the process takes 14 days and is often completed in a shorter

time In order to attract companies with good business performances to

the listed market, increase the supply for the market and offer investors

more investment options, in the past year HNX has made important

improvements in the dossier appraisal procedures This includes a shorter

time for dossier reviewing, a standardized listing procedure and support

offered to companies in their compliance with market regulations Thanks

to such efforts, in 2009 HNX welcomed a record number of newly listed

companies (72 newly listed and 23 companies moving from the HOSE),

which saw the listed market grow to 257 companies Additional listings

were also approved to 41 listed companies

As for the trading registration applied to UPCoM, to expand the regulated

market and narrow the grey market, sound and flexible policies have been

implemented at the HNX to encourage public companies to join UPCoM

Registration requirements and procedures have become more relaxed, so that companies’ information disclosure ensures efficiency and consumes less time Dossier appraisal is completed within 5 working days from the registration date As of December 31, 2009, 34 public companies coming from various business lines joined the UPCoM, representing VND3,274 billion in charter capital Despite its young age, the UPCoM has attracted the close attention of institutions and investors

The majority of listed companies was in compliance with information disclosure and reporting regulations and saw clear signals of an economic recovery, which were shown through optimistic operating results

Listing management also achieved noticeable improvements, particularly

in support provided to listed companies in terms of periodic and extraordinary information disclosure, application of charter templates and best corporate governance As a result, 2009 saw fewer cases of disclosure infringements HNX conducted reviews and submitted reports

of listed companies’ business performances to the SSC, in addition to proposals for smoother listed companies’ operations

Also in 2009, HNX organized the Businesses of the Year program to honour the outstanding performances of listed companies Based on objective selection criteria, 20 listed companies from various sections and

of different sizes were honored for effective performances, information disclosure, a strong recovery and sustainable development

The review and approval of listing dossiers by the HNX is subject to the Securities Law, Decree No 14/2007/ND-CP dated January 19, 2007 by the Government, Circular No.38/2007/TTGDCKHN-BTC dated April 18, 2007 by the Ministry of Finance on information disclosure in securities markets, and Decision No.322/QD-TTGDHN on the promulgation of disclosure regulations at the HASTC.

Review of trading registration dossiers by HNX is subject to the Securities Law, Decree 14/2007/ND-CP dated January 19, 2007 by the Government, Circular No.38/2007/TT-BTC dated April 18, 2007 by the Ministry of Finance, Decision No.108/2008/QD-BTC dated January 20, 2008 on promulgation of regulations on unlisted public companies (UPCoM) at the HASTC, Decision No 159/QD-TTGDHN dated April 27, 2009 on promulgation of UPCoM regulations.

MANAGEMENT OF LISTING AND TRADING REGISTRATION

20 Businesses of the Year

1 Doan Xa Port JSC

2 Tien Phong Plastic JSC

3 VINASHIN Petroleum Investment and Transport JSC

4 Asia Commercial Bank

5 Sai Son Cement JSC

6 Vinaconex Advanced Compound Stone Joint Stock Company

7 Petroleum Technical Services Corporation

8 Hai Au Hapaco JSC

9 Song Da No 9.09 JSC

10 Vietnam Construction and Import-Export Joint Stock Corporation

11 Song Da SIMCO JSC

12 DABACO Vietnam Corporation

13 Vinacomin - Nui Beo Coal JSC

14 Saigon Fishing Net Joint Stock Company

15 Viglacera Tuson JSC

16 LILAMA 45.3 Joint Stock company

17 Kinh Bac City Development Share Holding Corporation

18 Lamdong Foodstuffs Joint Stock Co

19 Book and Educational Equipment JSC in Ho Chi Minh city

20 Naloi Hydropower JSC

Finance Technology Oil Materials Industry

Household goods

Consumer Services Telecommunication Convenient Services Health care