This five-year strategic marketing plan for Hochiminh Stock Exchange (HOSE) has been created in order to secure direction for growth and to inform employees of company’s status.

Hochiminh Stock Exchange is the first ever stock exchange in Vietnam which was established in 2000. After nearly 10 years of operation, HOSE has been enjoying the good macroeconomic environment of a emerging market and a transition country. HOSE also faces competition from HNX and SGX, SET in attracting listing companies, the supply side of the market.

Its branding as the main board for blue chip stocks and somehow the monopoly in providing the marketplace for trading help HOSE to overcome the shortage in diversifying products, the weakness in IT infrastructure and the lack of competency. That SWOT analysis highlights the strategies that must be taken by HOSE.

They are investing for growth and maintaining the main board and leading position in Vietnam ; investing in IT and corporate governance, diversifying products, exploring and developing the new market segment in Lao and Cambodia , cooperating with foreign stock exchange in cross border listing to allow companies to secondary listing.

Based on the supply and demand sides’ characteristics, market is divided into two segments: business community – the supply side/the issuers, and general public – the demand side. Business community then is subdivided into Vietnamese enterprises segment, the Lao and Cambodia enterprises segment and cross-border listing segment.

That way of market division help to identify the competitor of HOSE in each segment in which HNX is the main and direct competitor on both listing companies and investors, SET is a potential competitor in attracting Lao , Cambodia companies to list and SGX is a potential competitor in attracting Vietnam companies to list.

Identifying the competitor in each segment, HOSE draws the strategies for marketing which focus on encouraging investors to invest, encouraging companies to list, developing the good relationship with listing companies, maintaining the good image of the stock exchange and educating the general public.

That marketing strategy is done through various detailed actions to media relation, publication and printed materials, events, website and visitors’ center by HOSE’s marketing and PR department, led by one vice general director, through the reporting to and approval by CEO. Analysis proves that HOSE has enough marketing budget to implement the plan.

By implementing this marketing strategy, HOSE would create the good image and sound position in Vietnam and Asian region. The strategy would, therefore, make HOSE of more interest to both local and overseas investors.

Over the next five years, HOSE can increase its strength and attractiveness, offer new products and meet the international standards of a modern stock exchange.

1. INTRODUCTION

1.1. Company description

Hochiminh Stock Exchange (HOSE) is the first stock exchange of the country to be established and has operated since the year 2000.

On 11^th May 2007, the Prime Minister signed the decision No 559/QĐ- TTg to transform HCMC Securities Trading Center into HOSE. HOSE is a one-member limited company owned by the state with chartered capital of one thousand billion VND and operates under the Securities Law, Enterprise Law, the Stock Exchange Charter and other related legal documents. HOSE’s organization consists of Board of Directors, Supervisory Board, Management Board and 14 departments with total staff of 205 as of July of 2009.

HOSE is always the pioneer in many activities including trading organization, listing management, information dissemination, especially investment in information technology, research and development of new products. After 9 years of operation, HOSE by itself has built a sustainable foundation for its development. Many leading companies have been trading stocks on HOSE, The value and volume of trading has increased steadily over the years. As of September of 2009, there were 173 stocks, 65 bonds, 04 fund certificates listed on HOSE, making total listed value reach US$ 4.4 billion[1](on par value). Market capitalization was approximately 30% of GDP. HOSE currently has 97 securities member companies, at which more than 600 thousand accounts of local and foreign investors have been opened.

Upgrading technology infrastructure up to modern and relevant international standards is always an important highlight of HOSE during its operation and integration. To meet increasing demand in transactions, HOSE has applied continuous matching method since 2007 and online trading since the early of 2009. Moreover, HOSE has also deployed a large bidding package of installing a state-of-art and synchronized IT system not only for HOSE but for the whole market.

By co-operating and signing MOU with series of regional and global stock exchanges in such areas as technical support, employee training, and information exchange, cross-listing, etc. The position of HOSE is enhanced significantly in the era of integration. Notably, signing MOU among the 6 Stock Exchanges in the ASEAN Linkage initiative, participating in AOSEF, and possibly WFE in the near future have been evidence for HOSE’s comprehensive integration into regional and international markets.

1.2. Problem statement and Objectives

Vietnam economy becomes more and more intergrades into international economy, especially after the accession to the WTO in early 2007. It means that the Vietnam financial market also open widely. It gives more advantages and even challenging for Vietnam enterprises. In this context, Vietnam enterprises need to have much efforts and sound strategies to overcome challenges ahead.

The transformation of Ho Chi Minh Securities Trading Center to Ho Chi Minh Stock Exchange was the significant milestone for HOSE. This induced Ho Chi Minh Stock Exchange operating more independently and having sound strategies for its development. Therefore, building a marketing strategy for Ho Chi Minh Stock Exchange is gaining its important, helping Ho Chi Minh Stock Exchange to create a good image and sound position in Vietnam and Asean region.

The focus of the thesis is to address and solve the following issues:

1. What are the strengths, weaknesses, opportunities and threads of HOSE to identify the position of HOSE in Vietnam and Asean region?

2. How to attract new companies listing on HOSE?

3. How to encourage more investors in both homeland and overseas?

4. What improvements to increase the image of HOSE?

1.3. Scope of works

The objectives of this paper are to design the detailed 5 year marketing plan for HOSE so that it could concentrate its limit sources to get the best result in raising both supply and demand side.

1.4. Method to solve the problem and outline

The research focuses on collecting data about the operation of HOSE and data about some competitors in country and Asean region such as HNX, SET and SGX. And then, the data are analyzed and interpreted to identify the key issues affecting to the development of HOSE. Base on this, strategies and action plans will be proposed.

The paper is divided into 8 parts as follows:

1. Introduction.

2. Environment analysis.

3. SWOT analysis.

4. Business objective and strategy selection

5. Target segments.

6. Marketing strategy.

7. Action plan.

8. Conclusion.

2. ENVIRONMENTAL ANALYSIS

2.1. External environment analysis

2.1.1. Macro environment analysis

- Economic: In year 2007, Vietnam GDP growth rate reached 8.5%, making it 3 consecutive years of growth rate above 8%. This is a very attractive phenoniment of Vietnam in attracting foreign investors. After credit crunch in the US , the economy grew at slower speed, but still is among a few countries that has positive growth rate around the world. The FDI keep increasing, despite the slow down of the economy and high inflation rate.

- Technological: Technology is not the strength of Vietnam . According to Report in World Economic Forum on Technology 2007-2008, the weakness of Vietnam technological environment is security (rank 101), property right (rank 100), training quality (rank 109) and legal framework (rank 105). Vietnam is ranked 6^th in 10 Asian country. Also, this pulled Vietnam down in terms of global competitiveness to 70 out of 134, in which the technological readiness got 3.1 on 7 scales. This would be the great challenge to the whole economy as well as to the securities market when the technology will be the leading factor.

- Political-legal: Vietnam has been proved to have the stable political environment so far. Government being keen to adapt to the market economy through the reform program makes the favorable environment for local and foreign investors. The legal framework has also been improved. Investment Law, Corporate Law, Securities Law… are among those that were drafted, issued and took into effect so that the legal framework is more in line with the international one. Vietnam was in top ten in terms of investment attractiveness among 50 countries and territories in rank, according to A.T. Kearney analysis. However, the transparence, the administration procedure and bureaucracy still are the hurdles to investment.

- Socio- cultural: Vietnam is proud of stable sociocultural environment, making it a destination for investors. Increasing the GDP, earning helps people enjoy higher level in living standards. Children get better education, people are more consumer-oriented, and workers are more skillful. According to UN 2007-2008 report, Human Development Index of Vietnam was 0,773, increasing 4 grades to 105^th in total 177 countries. Also, Vietnam has the best demographics in Asia with dependency ratio around 33%. Given the opening of the economy and high level of standard of living, new industries such as banking, finance and technology are quickly penetrating into the economy. A large number of potential investors and skill workers are what to be expected in near future.

- Future: Country continues to have positive growth, supporting by the strong FDI inflow and FII inflow. However, the equitization program get difficult which would take away the competitive advantage that Vietnam securities market has been enjoying so far. The openness of the economy foresees a lot of competitiveness from foreign partners and the domino effect from the world economy. For the stock market, it is time to think of preparing to develop in quality, not focus on quantity as the previous target.

2.1.2. Micro environment analysis

HOSE identifies that its principal competitors are those stock exchanges that have attracted, continue to attract, intend to attract and have the potential to attract Vietnamese issuers to list securities on their trading floors. Here arises a question, until now Vietnam companies want to list on foreign stock exchange. Can foreign companies go to list on HOSE’s floor?

In order to compare HOSE with competitors, data of main board where only common shares are traded are used. Main indicators in stock market are:

- Market size: number of listing companies and market capitalization

- Profitability: market index

- Liquidity: trading value

(See WFE definition of above terminology in appendix)

Those indicators help to identify the strength, attractiveness of a stock exchange based on the following criteria:

Strength:

- Number of listing companies, market capitalization, trading value

- Key successful factors (KFSs): IT trading system, rules, specification human resource

Attractiveness:

- Market growth: the growth in number of listing companies, market capitalization, trading value

- Performance (Rate of Return): market index

- Listing criteria, added value as brand, raise capital…(for listing companies)

a. Hanoi Stock Exchange (HNX)

HNX and HOSE are two organized marketplaces for securities trading. Previously, HNX was aimed to be the OTC market and government bond market for Vietnam while HOSE was developed to be marketplace for listed stocks and listed corporate bonds. However, companies that are currently listed on HNX but qualified for being listed on HOSE are not compulsory to change the listing venue. This vague line between HNX and HOSE makes HNX the competitor of HOSE.

HNX has some attractiveness compared to HOSE from the listing companies’ point of view:

- Lower listing criteria in terms of capital, profits and corporate governance: That would make the listing procedure less lengthy compared to that of HOSE. So far the number of listed companies on HNX is 228, about 45 companies ahead of HOSE.

- Loose information disclosure obligation. This explains why there are number of companies on HNX qualified for being listed on HOSE but choosing not to change the listing venue.

- HNX locates in Hanoi , the country’s capital. A majority of listed companies on HOSE and HNX are previously state-owned enterprises with head-quarters in Hanoi . HNX marketing effort would have stronger effect with close relationship and location.

HNX is currently facing some weakness:

- IT infrastructure is out-of-date. Their trading system was developed by a local vendor, which does not support Straight through Processing (STP) while the HOSE system supports this. STP solves the problem of bottleneck in transferring order from brokers to exchange’s trading system. The IT technology of HOSE helps to increase the trading volume, hence the market liquidity. The record of trading volume in HOSE was set on 16 October 2009 with around 123.4 mil shares traded. HNX traded only 56 mil shares in the same trading session. However, with the new trading system to be bought and launched in 2011 for the whole market (including HOSE and HNX), HOSE will enjoys this advantage temporarily unless it keeps continuing to improve its trading technology and facilities.

- With the lower required capital, the companies listed on HNX have less liquidity compared to HOSE. The market capitalization of HOSE as of 12 October 2009 is more than 30% of 2008 GDP while that of HNX is about 11%.

Followings are statistics on listing companies and investors on HNX and HOSE:

a1. Listing companies

Table 1

Main listing criteria	HOSE	HNX
Paid-up capital (US$ mil.) Gaining profit Outside investors Fees (US$)	4.7 last 02 consecutive years 20% hold by 100 1,176 (annual)	0.588 last 01 year 20% hold by 100 1,176 (annual)

HOSE Table 2

	End 2006	End 2007	End 2008	Sep-09	2009 est.
Number of listing company	106	138	170	173	185
Market Capitalization (million US $)	8,703.94	21,436.76	9,961.53	28,861	31,746.58
Trading value (million US $)	2,086.61	11,806.87	7,328.01	14,358	19,144.47
Index (Vni-index)	751.77	927.02	316.32	580.9	n/a

HNX Table 3

	End 2006	End 2007	End 2008	Sep-09	2009 est.
Number of listing company	87	112	168	223	243
Market Capitalization (million US $)	4,305.26	7,653.65	3,245.57	7,430	7,801.65
Trading value (million US $)	237.63	3,756.42	3,360.14	6,829	9,105.18
Index (Hastc-index)	242.89	323.55	105.12	184.29	n/a

So far HNX have 45 companies eligible for listing on HOSE but only 02 companies have moved to HOSE. Market capitalization of HOSE is 04 times as much as that of HNX.

Strength, attractiveness

	HOSE	HNX
Strength Attractiveness	High High	Medium High

a2. Investors

Liquidity of HOSE is 2.18 times as much as that of HNX while profitability shown by market index is nearly the same.

Trading value of foreign investors Table 4

Trading value (US$ mil.)	End 2006	End 2007	End 2008	q3-2009
HOSE	245.0122	3540.349	2636.636	2463.704
HNX	67.50729	490	257.8235	403.4595
Ratio	3.629419	7.225201	10.22651	6.106447

To many foreign investors, trading on HOSE’s floor is their first option. While the average ratio in trading value between HOSE and HNX is 2.18, the ratio in foreign investors between the two exchanges is up to 10 times, especially during global financial crisis in 2008. It shows that branding and liquidity are 02 important factors.

Strength, attractiveness

	HOSE	HNX
Strength Attractiveness	High High	Medium Medium

b. ASEAN: Singapore, Thailand

Together with HOSE and HNX, Singapore Exchange (SGX), Stock Exchange of Thailand (SET), Bursa Malaysia (BM), Philippines Stock Exchange (PSE), and Indonesia Stock Exchange (IDX) form the stock market in the South East region.

Considering the competitors as above defined, it is narrowed down to SGX and SET. SGX has several seminars in Vietnam in effort to attract listing. SET is very close in distance and has good relationship as well as potential to attract listing from Vietnam .

b1. Singapore Exchange Limited (SGX)

SGX is the stock exchange in Singapore. SGX was formed on December 1, 1999, following the merger of two established and well-respected financial institutions - the Stock Exchange of Singapore (SES) and the Singapore International Monetary Exchange (SIMEX). It is the Asia-Pacific's first demutualised and integrated securities and derivatives exchange.

As of 31 December 2008, the Singapore Exchange had 767 listed companies with a combined market capitalization of US$ 264,974.40 billion. The revenues of Singapore Exchange are mainly from the securities market (72%) and derivatives market(28%).

SGX outperformed HOSE in every sense:

- Singapore is reputed to be the financial hub in the South East Asia . A lot of international financial institutions have office in Singapore , making its financial transaction very crowded.

- SGX is the only exchange in Singapore that organizes trading for stocks, bonds, derivatives so it can create a lot of products and services to facilitate the investment and trading need of investors. It has main board, catalyst board, derivatives board. Stocks, structured warrants, ETFs, REITs, business trusts, futures and options are traded on SGX.

- SGX is listed companies so most of its action is profit-motivated. It also can quickly raise capital to fund projects.

- SGX is a competitor with technology, branding, proven track record of high ethical standards, and managerial capability that exceeds that of HOSE. HOSE is constrained by the speed at which Vietnam 's regulators allow derivatives trading to grow.

SGX’s main board listing criteria ((www.sgx.com)

Table 5

	Alternative 1	Alternative 2	Alternative 3
Paid up capital (US$ mil.) Gaining profit (US$ mil.) Outside investors Exchange rate (end 2007) Fees (US$)	Nil 5.2 over 03 years 25% held by 1,000 1.4395 max 11,700(initial) max 1,170 (annual)	Nil 6.95 in 01 or 02 years 25% held by 1,000	55.6 Nil 25% held by 1,000

Some SGX’s main indicators Table 6

	End 2006	End 2007	End 2008
Number of listing company	708	762	767
Market Capitalization (million US $)	384,286.40	539,176.60	264,974.40
Trading value (million US $)	180,242.70	381,288.70	259,885.00
Index (Straits Times Index)	2,985.83	3,482.30	1,761.56

When a company grows to a certain scale, it goes to bigger market. It would, therefore, need more capital and branding awareness. As above mentioned, SGX is considered the financial hub of the region. So, leading Vietnamese companies want to list on SGX to raise profile of company abroad. On that side, SGX is a potential competitor in attracting Vietnam companies.

Strength, attractiveness

	HOSE	SGX
Strength Attractiveness	Low High	High Medium

b2. The Stock Exchange of Thailand (SET)

SET is the national stock exchange of Thailand. As of 31 December 2008, SET had 525 listed companies with a combined market capitalization of US$ 103,128.20 billion.

With 25 year older than HOSE, SET is going ahead of HOSE in numbers of fields:

- SET is very strong with IT. Their trading system is built in house. It also develops products and services to facilitate brokers and investors.

- SET is also good at providing information to investors and publics. It has its own TV channel, library opened to public, guideline to train children and household investors….

- SET has good human resources with personnel graduated abroad and speaking English fluently.

- IPO in Thailand means listing so there is direct connect between IPO and listing. There is no OTC market.

However, SET is somewhat stuck on its current development:

- SET used to be the emerging stock market that attracts foreign investors. Now that attribute has gone.

- It is not for profit organization.

SET’s common stock listing criteria Table 7

Paid up capital (US$ mil.)

Gaining profit (US$ mil.)

Outside investors

Exchange rate (end 2007)

Fees (US$)

8.9

Minimum 1.48 for 2 or 3 latest years

1,000

33.685

1,484 – 89,060 depending on paid up capital (initial) plus annual fee

(http://www.set.or.th/en/products/listing/criteria_p1.html)

Some SET’s main indicators Table 8

	End 2006	End 2007	End 2008
Number of listing company	518	523	525
Market Capitalization (million US $)	140,161.30	197,129.40	103,128.20
Trading value (million US $)	100,928.60	117,893.20	115,980.10
Index (Set Index)	679.84	858.1	449.96

About market size and liquidity SET is one of leading exchanges in Asean. SET’s objective is to become a stock exchange of the area. However, SET’s listing criteria is too high for Lao , Cambodia companies. Until now, no Cambodia or Lao company has listed their shares on SET. It opens a gap for both HOSE and SET.

Strength, attractiveness

	HOSE	SET
Strength Attractiveness	Medium High	High Medium

2.2. Internal environment analysis

2.2.1 Resources analysis

HOSE has just been reformed from the government agency to a state owned company. Government grants capital to HOSE step by step in line with the investment project that HOSE is undertaking, namely IT infrastructure project, office building project and back up site project.

The main revenue comes from trading fee (65% of total revenue) with the trading fee rate at the highest level in the region. This on one hand will put HOSE on the competitive pressure compared to other stock exchanges in the region, on the other hand, would give more room for HOSE to develop other source of revenue.

HOSE is branded as the blue chip stock exchange in Vietnam thanks to the listing criteria stipulated in the Securities Law. Only companies with capital over US$ 4.7 mil. are qualified to proceed listing procedure in HOSE. The high quality of listing companies increases the liquidity of the market.

Two thirds of the whole stock trading value is in HOSE. HOSE is also well known as the leading in the country in applying advance technology in the market. Its Straight-through-processing (launched in 2008) helps to solve bottle neck problem in transferring order into the matching system, causing the follow-suit investment in the trading system of the brokerage firm. HOSE is also investing in the new, whole package IT system (projected to be launched in 2011) that would promise to facilitate trading, clearing, settlement with the advance technology.

2.2.2 Competence analysis

Since transformed into a corporate model, HOSE has established several new departments along with old functional ones, namely Research and development, Public Relation, Internal Auditing. Those fill the gap of HOSE in implementing proper corporate governance and good customer-oriented business environment.

R&D department, since established, has been doing several studies on new product with the aim at providing more tools to the market to meet the market needs. Those include study on derivatives, index, industry classification standard…. The result is still to be evaluated; however, it proves the fact that HOSE is keen on development and satisfying customers’ need. PR department has conducted several marketing campaign recently. The target object is the companies that have potential to list on HOSE. At the same time, Internal Auditing Department is leading the application of ISO 9001-2008 on HOSE which focuses on innovation and satisfying customer’s need.

The regulatory function of an exchange is conducted by HOSE regularly and extensively. New technical solutions have been introduced to the market step by step that help to increase the facilities to the investors. Trading from one session a day moved to 3 sessions a day and now moves to continuous matching. Simple limit order is now accompanied by order at the opening and order at the closing…. The market surveillance is enhanced to maintain the transparency, equity and fairness to the marketplace. Listing procedure is shortened and reporting mechanism is in the process of atomization.

HOSE is conducting the regulatory function and business function in harmony because it always considers transparent, equitable and fair marketplace attracts liquidity, hence, create revenue.

3. SWOT ANALYSIS

3.1. Opportunity

- Securities and securities market are the important parts in the economic- social development strategy of the nation, which are received the interest and support by the Party and the Government.

- The Vietnam securities market is potential because lots of financial products have not been introduced, many corporations have not been listed, and many capital flows in other channels has not been redirected towards stock market.

- The equitization process is in the course of deployment and will be speeded up in the future, which will supply more stocks for the exchange

- Vietnam is increasingly developed and integrated into the world, WTO membership provides HOSE with opportunity to create more cooperative relationship, attract more foreign investors and companies to trade and list on HOSE.

- Economic crisis makes overseas securities markets slow down, which is the chance for Vietnamese stock market to keep pace with the region.

- The emerging economy with high demand of capital mobilizing from enterprises is the opportunity for them to participate in stock market via issuing and listing on HOSE.

3.2. Threats

- The Vietnam stock market is a newly-born with latent risk and instability

- The economic and financial fluctuation in the world impacts the country’s macro-economy policy, affecting the stock market

- The policy on stock market is not flexible enough to meet the market demand in due time (long time to consider or delay)

- The legal framework for the securities market has been incomplete and inconsistent; especially, the structure of the market has not been clear, resulting in unnecessary competition among market organizers in Vietnam . With a small sized market like Vietnam ’s, that there are two stock markets is a waste of financial resource and decreases the strength necessary for competing with foreign stock exchanges.

- There has been overlapped management among regulators as well as no connection among interrelated agencies’ information systems (such as banks, tax authorities, business registration management agencies and etc.), causing difficulties in information and market management.

- There has been intense competition in terms of resources in the financial market, especially the competitive pressure coming from regional and international stock exchanges.

- The securities market has gradually reinforced in terms of both quality and size. The complexity in types of companies together with investors’ behaviors has increased, causing big challenges to HOSE’s management and operation mechanism.

3.3. Strengths

- As the first marketplace for trading securities of Vietnam , HOSE has become a “brand-name” and a reliable exchange in terms of transparency, stability and exemplarity from the perspectives of domestic and foreign investors.

- Located in Hochiminh City - an economic and financial center of the country, HOSE has the advantage to develop the largest trading platform for high-quality securities in Vietnam .

- To hold the monopoly in organizing securities market and distributing market data and information.

- The transformation into enterprise model will result in enhancing self-motivated activities and financial autonomy.

- The management board and the key executives have a lot of experiences and profound understandings on securities market, have management ability and innovative thinking

- Staffs are young, qualified, dynamic, creative, enthusiastic, prudent, and particularly ready for working under high pressure.

- Lots of cooperation with other stock exchanges in the region and around the world, creating favor conditions for learning experiences, transferring technology and training.

- As HOSE has been left behind, the exchange can learn a lot of experiences on how to organize and regulate markets from other countries

3.4. Weaknesses

- Infrastructure and technology are not modern. Facilities and support equipments which require manual processing, have limited the efficiency and quality when market scale increases.

- Working procedures have been built, but still not professional.

- Due to being in transitional stage, organizational structure is still cumbersome, management mechanism is still inflexible; the cooperation among the departments is still unharmonious.

- Financial resource is not strong enough to finance the innovation to increase working efficiency

- Compared to other Exchanges in the region, HOSE is immature and unseasoned. Goods and services are still not diversified and professional

- Not yet be able to control and react quickly towards the incidents occurred in the market.

- Human resource is not stable. The structure with a majority of young staffs will limit the ability to solve the problems in daily activities due to the lack of experiences and qualification

- Foreign language ability of the staff is limited, which will not meet the job requirements

3.5. Use SWOT analysis’s result

3.5.1 Use the strengths

The strength of HOSE reflects the structure of Vietnam stock market. HOSE is the main board where Vietnamese blue chips are traded. HNX can be deemed as the second board and UPCOM market (a kind of OTC market). The right business strategy for HOSE in the competitive context with HNX is to maintain and invest for growth.

3.5.2 Stop weaknesses

Investing in the IT infrastructure and corporate governance seems to be the must for HOSE. Buying the modern system that is being used by large exchanges could save the development cost. Also, new products must be introduced to provide diversifying tools to meet diversifying needs.

3.5.3 Exploit opportunities

HOSE can focus on Indochina segment to attract Lao , Cambodia companies and investors because HOSE’s listing criteria is more suitable. Furthermore, the special relation among Vietnamese, Lao and Cambodian governments can help us to open legal way for Lao , Cambodia companies to list on HOSE’s floor. Given all that being done, HOSE can close the gap an open the entry to market for Lao , Cambodia enterprises.

3.5.4 Defend against threats

Cross-border listing is an indispensable process, therefore SSC, HOSE and SGX need to cooperate to set timetable about legal system, IT infrastructure, human resource… especially from 2012 when Vietnam has to open financial market as committed when joining WTO.

The cooperation is based on mutual benefits as only leading Vietnam companies are allowed to list on SGX, only secondary listing are permitted… in order to protect the size and liquidity of HOSE. This business strategy is so called “defendant and cooperate”.

4. BUSINESS OBJECTIVES AND STRATEGY SELECTION

4.1 Objectives

The objectives of HOSE is to become the strong and sustainable institution providing trading facility to market, having ability and capability to provide diversified products and services with high quality; possessing modern IT infrastructure. Having all those attributes helps HOSE to meet at its best the market participants needs and enforce its ability to compete and integrate into the world securities market.

4.2 Business strategy

- Invest to maintain the main board and to reinforce the leading position in Vietnam .

- Explore and develop new market segments such as Lao , Cambodia while expand the current local and foreign market segments.

- Develop new products and services (e.g. bonds, derivatives) and new trading system.

5. THE TARGET SEGMENTS

5.1. Descriptions and assessment of different segments

In the securities market in general and on HOSE in particular, it can be divided into two segments: supply and demand. The demands for securities trading and investment can come either from individual or institutional investors. This group would be called general public(not including institutional investors). However, the supply sides of the market are made of mere institutions. They are companies issuing shares and bonds to raise capital in the primary market and use it to fund investment and business expansion. Those stocks and bonds are then listed on the stock exchange to facilitate the trading needs of the investors. This group for the purpose of this thesis is called “business community”.

(1) Business community

5.2. Vietnamese enterprises

So far Vietnam has enjoyed an advantageous business environment for securities market when supply side goes up in both quantity and quality. There are two main supply sources:

The first supply source derives from the growing process of the emerging economy. As the country emerges, new enterprises are established everyday to operate and explore the opportunities of the market. They can be the potential issuers of the securities market through issuing stocks and bonds, especially Joint Stock Companies (JSC).

The number of JSCs without state capital increased nearly twofold from 10,549 (end of 2005) to 20,862 (end of 2007)[2]. Importantly, JSCs have developed not only in quantity but also in capital capability. Out of 20 thousands JSC at the end of 2007, there are 1,323 non-state enterprises with capital of more than VND 50 bill (approximately US$ 03 mil), compared with 402 companies at the end of 2005.

The second supply source derives from the equitization process of the country. The equitization program has been activated since 1990s with the aim to restructure state owned enterprises (SOE), to innovate their corporate structure and to release the capital burden of the government. Since then, the equitization process has been successfully carried out and the number of SOEs has been reduced from 12,000 to more than 1,500, in which a lot of companies transform to JSC type.

SCIC is now having representative ownership at 903 transformed companies[3]. Particularly, many big companies such as Vietcombank, Viettinbank, Baoviet…have gone through IPO and became public companies. Those companies provide the market with enormous goods to trade and invest which in turn helps to improve the stock market in both size and quality.

Stock exchanges are now considered the effective tool in facilitating equitization scheme, which helps to obtain the objective of enhancing corporate governance and improving government’s budget.

Among public companies registered with SSC (as of 19 Aug2009), there are 1019 companies satisfying listing requirements of HNX, in which 242 companies are qualified to be listed on HOSE. HOSE and HNX will, therefore, compete directly with each other in attracting these 242 companies on the short term.

5.3. Cambodia, Lao enterprise segment (potential newcomers)

Because of affect from global financial crisis, Lao and Cambodia have postponed launching their stock exchanges and it is a chance for HOSE to attract their companies to list on the exchange. This could be done thanks to familiar legal system and good relationship between Vietnam , Lao and Cambodia . By June 2009, Vietnamese businesses have invested in 186 projects in Lao, making Vietnam the third highest country investment among the foreign investment in the country, according to statistics provided by the Lao Ministry of Planning and Investment.

Investment from Vietnam into Cambodia has kept growing over the years. According to local economic experts, since July 13 joint venture contracts worth nearly 500 million US$ have been signed between Vietnamese investors and their Cambodian partners[4]. So, the duty of HOSE is attracting not only Cambodian and Lao enterprises but also Vietnamese enterprises that invest in these two countries.

Thailand Stock exchange (SET) can become HOSE’s rival in this segment because Thailand , Cambodia and Lao share many commonalities in terms of culture, writing and etc.

Basis countries data (2007)[5] Table 9

	Vietnam	Lao	Cambodia	Thailand
GDP (US $ bn) Population (mil.) GDP per capita (US $)	70.7 85.9 823	5.013 6.3 795	8.69 13.4 649	245.4 66.5 3,689

5.4. Overseas-listing Vietnamese enterprise segment (potential out-goers)

When a company lists on a stock exchange, it seeks for added value to raise capital, branding… meaning listing on the exchange must be suitable with company’s objective.

It can be assumed that a local company may apply to list on a local exchange when it suits the company’s objectives for a certain period of its operating life. When that company becomes bigger and has region-wide or world-wide operation, it must seek to list on a regional or global exchange to keep in pace with its scale and brand. That explains why some Vietnam companies (Vinamilk, Vietcombank, PVDrilling, PVFC…) want to list on foreign trading floors such as Singapore (SGX).

When entering WTO, Vietnam committed to open domestic financial market by 2012. It can be forecasted that after 2012, with legal amendment, there would be more and more Vietnamese companies listing abroad.

This could make SGX become a competitor for HOSE despite the fact that SGX’s listing criteria are much higher and more stringent, SGX’s listing fee is more expensive and there is still a big gap in legal framework between the two countries.…

(2) General public

In Vietnam stock market, securities firm are usually member of both HOSE and HNX. Following is the investor base in Vietnam stock market:

Table 10

	End 2006	End 2007	End 2008	Q2-2009	Est. 2009[6]
Total	67,920	349,402	531,137	648,033	745,238
Institutional investors	404	1,585	2,335	2,706	3,112
Vietnam	343	1,283	1,837	2,140	2,461
Foreigner	61	302	498	566	651
Individual investors	67,516	347,817	528,802	645,327	742,126
Vietnam	66,110	339,678	517,359	633,647	728,694
Foreigner	1,406	8,139	11,443	11,680	13,432

In 2007, securities market was booming, total number of investors increased 5 times as compared to that of 2006. The two following years have witnessed 2-digit growth rates which are 51% (2008) and estimated 40% (2009).

5.4.1 Local investors

After 24 years of reform, stock investing channel has now become more and more familiar to Vietnamese people, particularly urban and middle-income class. With the population of 86 million of which 30% live in big cities such as Ha Noi, Ho Chi Minh City , Hai Phong, Da Nang , Can Tho, Bien Hoa…, it is easy for the market to expand the investor base.

Vietnamese investors are not permitted to trade stocks overseas as stipulated in the foreign exchange currency regulation of the State Bank of Vietnam (SBV). Those barriers make Vietnamese investors buy/sell stock in homeland market only. Market regulators is now drafting the legal document which would allow securities firms to offer services relating to overseas trading.

5.4.2. Foreign investors

Foreigner investors comes from more than 20 countries such as Japan, South Korea, China, Taiwan, Europe, USA, Singapore, Thailand, Cambodia …and FII increases up to US$ 5.7 bil.[7]

Some big institutions as Merrill Lynch International, Citi Group, J.P Morgan from USA; Deutsche Bank from Germany; Credit Suisse from Swiss; Tong Yang, KITM from South Korea; ANZ from Australia…have also invested in Vietnam.

Foreign investors can own up to 49% of outstanding shares in public companies according to Decision No.55/2009/QĐ-TTg dated 15 April 2009 issued by Prime Minister. They can transfer the profit at anytime and withdraw principal after 01 year.

Stock market is a special and different from goods market. Investors buy or sell stock for return they expected. They can take high risk in order to get high return. Stock investment requires knowledge, technique and carefulness. It requires clear regulation, fair, transparent and orderly market from government and stock exchanges.

So, duties of HOSE with the public are to educate them and create a positive image to potential stock investors.

6. MARKETING STRATEGIES

6.1. Encourage investors to invest

Investors have many options to invest; they can invest in gold, real estate instead of stocks or bonds. Understanding the reason why investors invest here but not in other places helps to find the incentive to encourage investors to go to the market, that is the main duty of HOSE.

Vietnam is an emerging market with market index fluctuates more than in developed markets. It means investors can either earn more return or suffer greater loss here. These characteristics attract the investors who want high risk for high return.

Vietnamese and foreigner investors have specific strength, weakness, objective and strategies in investment. They can be very active in buying and selling in short time or they can choose to follow the passive trading strategy to buy and hold for a long time. Investors should be divided into individual and institutional and applied B2C or B2B method accordingly:

Þ To attract Vietnamese investors to invest on HOSE, conferences and PR should be organized by HOSE or in cooperation with securities companies, mass media.

Þ Foreign investors have important role in Vietnam stock market; they bring in not only strong financial resource but also investment knowledge. During certain period, especially 2000-2007, they are leader in Vietnam stock market. There is good way to reach global investors via cooperating with various financial organizations such as securities companies, funds, foreign communication organization, and global custodian banks (HSBC, Citi Group…).

6.2. Encourage companies to list:

Listing companies and investors are in spiral cycle. More listing companies means larger market capitalization, hence increase in liquidity through trading volume. Market capitalization and liquidity attract investors to invest and when they are dealing, the liquidity is improved. The liquidity will, in turn, attract other companies to list and a cycle is created.

Þ B2B approach should be used to the potentially listed companies, including companies from OTC and HNX that meet HOSE’s listing criteria. Conferences and PR actions should be done to encourage Vietnam companies to list on HOSE.

Þ To attract Lao , Cambodia companies, listing conferences at Lao , Cambodia and distribution of professional materials (annual report, fact book, guideline…) are prioritized. Conferences co-organized by the Vietnamese government and local government would bring the better effect. MOUs between governments, state securities commissions with the pilot listing companies are the good way to develop this new market segment.

6.3. Enhance relations with listed companies

Building a good relationship with listed companies plays an important role. HOSE should make it obvious to the listed companies that HOSE branding strategy is co-branding between HOSE and listing company. It ensures mutual benefits for both HOSE and listing companies. This can be done through several of actions:

Þ Holding conferences and road shows as platform

Þ Incorporating companies in exchange publication

Þ Highlighting key companies on exchange website

Þ Celebrating IPO’s, the first trading day

Þ Hosting Listing companies’ Annual report contest

Þ Conducting training programs on capital market issues

Þ Hiring consultants and IR to produce research & reports

6.4. Maintaining positive image

HOSE must maintain its position as the main board of Vietnam stock market where blue chips are traded. Only can maintaining a fair, transparent and orderly market help HOSE to attract investors and companies to list. It is not an easy duty because of emerging market characteristics (e.g. investment decisions are influenced by rumor or ‘herding’ behavior of investors). All things make stock market unfair and investors feel unsafe.

HOSE should also have planned to change brand name “HOSE” (polysemantic meaning) to HCSE or HSX.

6.5. Educate the general public:

Public not only is potential investor for HOSE but they can assist or prevent the development of stock market. Educating the public is a permanent and long term duty. There are tools to reach this objective.

Þ Building and upgrading the user-friendly website

Þ Cooperating with educational institutions

Þ Building a visitors’ center: open to public or by appointment and groups only, concentrating in college and high school students.

6.6. Estimate expected results

The estimate expected result includes:

- Number of listing companies

- Market capitalization

- Trading value

- Quantity of investors

- Brand name

According to VN_EIU_Sep09 (www.eiu.com), some basis forecasting about Vietnam

Table 11

	2008	2009	2010	2011	2012	2013
Real GDP growth (%) Consumer price inflation (av, %) GDP (US$ bn at market exchange rates) GDP per head (US$ at market exchange rates) Exchange rate D:US$ (av)	6.2 23.1 90.2 1,048 16,440	4.2 7.3 90.5 1,040 17,762	5.0 8.0 97.3 1,109 18,200	6.8 8.5 103.4 1,166 18,241	6.9 8.0 119.9 1,340 18,277	7.5 7.8 132.5 1,466 18,343

Rely on this data and characteristic of Vietnam securities market we can estimate the growth 10% per annual (not including number of listing companies)

Table 12

	2009 est.	2010	2011	2012	2013	2014	2015
Number of listing companies	185	204	214	224	236	247	260
Market capitalization (US$ mil.)	31,746.58	34,921.24	38,413.36	42,254.70	46,480.17	51,128.18	56,241.00
Trading value (US$ mil.)	19,144.47	21,058.92	23,164.81	25,481.29	28,029.42	30,832.36	33,915.60
Quantity of investors	791,878	871,066	958,172	1,053,990	1,159,389	1,275,327	1,402,860

Branding name: HSX

HSX is main board in Vietnam and toward becomes stock exchange for Indochina area. Become WFE full member at 2015

7. ACTION PLAN

7.1. Alternative plans and mixes

7.1.1. Media relations

Today, HOSE keeps an ongoing, good relationship with media agencies. Media agencies consist of Vietnamese and foreign radio, TV, internet, newspaper, magazine.

HOSE supplies them with rules, information and data about stock trading, listing companies and member firms via leased line, internet, press release and website. HOSE also organizes press conference periodically or when necessary.

Leading Vietnamese media agencies that HOSE has good relationship with are:

- Voice of Vietnam (VOV), Voice of HCMC

- Television: VTV, HTV

- Newspaper: Thanhnien, Tuoitre, Laodong, Nguoilaodong, SGGP, Vietnam news…

- Magazine: Saigontimes, Dautu, TBKTVN…

- Web: Vietnamnet, HCMC web…

HOSE currently has contracts with foreign financial media agencies on following fields:

- Directly buy information, data: Interactive Data Corp., Thomson Reuters, Bloomberg L.P, Six Telekurds, Systex Corp.,

- Indirectly buy information, data through Reuters, Interactive Data: Leading Investment&Securities Co., Ltd, JiJi Press Ltd, Blue Systems ( Middle East ) Ltd, Quick Corp.

- Calculate market index: FTSE, Dow Jones, S&P

HOSE’s data (key statistics and 24 leading listed companies) are published monthly by S&P on “Emerging Stock Markets Review” in Frontier Market Profiles and Constituents category. [8] This information proves the attractiveness of Vietnam stock market to foreigner investors.

Objective:

- Maintain and develop the good relationship with media agencies.

- Present in emerging stock market category of S&P as well as FTSE, Dow Jones (the stock market has to be developed to a certain level that it can be classified as emerging market instead of frontier market).

7.1.2. Publications and printed material

The timely, correct and complete information is very important to investors. One of the advantages of trading on HOSE’s floor is the asymmetric information for investors are reduced. Alongside with supplying information through website, HOSE publishes:

- Daily Securities market trading bulletin which provides trading information including price, trading value, trading volume, financial ratios for each securities and relevant news…

- Annual report, summary record

- Listing guidelines

- Video program to introduce the history and operation activities of HOSE

Objective:

- Plan to publicize rules book, fact book, history trading data statistics, investor’s guide, share ownership survey…

- Special video program for 10^th , 15^th anniversary and other specific event

- Focus on providing convenient services to foreign investors

7.1.3. Website

In the internet era, website has important role in:

- Marketing and branding

- Training and education

- Culture exchanging

- Information gathering

So HOSE’s website needs to satisfy:

- Information disclosure obligation about listing companies for investors

- Dissemination about rules, trading information (before, real time, post trade), information about member firms and other information of HOSE

- User friendly website for the public

- Highlighting key companies on exchange website

Objective:

- Upgrade website, especially English version

- Build HOSE’s portal electronic information, upgrade its positive image

- Strengthen ties with public, supply training tools

7.1.4. Events

Professional events are main component of HOSE marketing activity. We can independently organize the events or cooperate with other financial institutions, official agents (MOF, SSC, HCMC government…).

The purposes of such events are:

- To increase exposure among institutional investors: Institutional investors are important partner in stock market as they help to increase the liquidity. HOSE holds several events in Vietnam ( Hanoi , Hochiminh city, Danang) and in Singapore , Hong Kong, Tokyo , and London , China … (In cooperation with Next View and Daiwa Corp.,) in recent years.

- To increase exposure to retail investors: The number of individual investor accounts is rather small compared to population. Helping them understand the purpose, operating mechanism and benefit of stock market is key for investor to go to market. Foreign individual investors could be focused through events, too.

- To encourage companies to list: HOSE holds number of events at Hanoi , Hochiminh city and sends delegates to Vietnamese companies to invite them to listing. In 2009, HOSE had 03 delegations to North, Central and South of Vietnam to seduce potential companies. Similar events could be organized in Cambodia and Lao to introduce the chance and value added for Cambodia , Lao companies when they list on HOSE’s floor.

Events main topic:

- Financial products: new financial products such as futures, options, corporate bonds… should be introduced when launched.

- New stock trading system: HOSE’s new system is expected to launch in 2011 which will need range of events to celebrate launching date, to introduce new facilities such as new types of order, new matching methods (call auction or continuous); trading time… encompassed in the system.

- Regulation: seminars on new or amended rules about trading, listing, disclosure… is needed for familiarizing market participant with the regulations to ensure the compliance and orderly market place.

- Listing: Listing ceremony is held for the first trading day, other events related to listing companies such as annual report contest, establishing listing club… also need to celebrate.

- Investors’ relations: Investors would be more confident if they understand clearly about rules, operation and activities of HOSE that could be achieved through lots of way including seminars, events, mass media…. Training the public could also be done by HOSE itself or in cooperation with education institutions (Securities Research and Training Center , Hanoi Economy University , HCM Economy University , Banking Institution…).

- Celebrating events: 10 years of Hochiminh Stock Exchange - 2010, 15 years Hochiminh Stock Exchange - 2015, 70 years of Vietnam ’s independence (1945-2015)… are big events that could attract attention of public to the securities market.

Kind of events:

- Press conferences

- Professional seminars, conferences

- Opening bell ceremonies

7.1.5. Visitors’ center

Visitors visiting HOSE are mostly Vietnamese students from universities and foreigners. For the purpose of visiting, they should be grouped together and get HOSE’s approval to visit. In 2009, HOSE moves to floorless trading system.

On one hand, it is a long step moving forward in IT infrastructure; on the other hand, number of visitors decreased sharply as the physical image of the securities market no longer exists. It drops from average 300 visitors per year to 60 visitors in the first 09 months of this year. Building visitors’ center then would help to improve the connection to the community by open the center for public, especially college and high school students and building a securities market memories room at HOSE.

7.2. Schedules

Timeframe: from 2010 to 2015. Three categories:

- Ongoing category: frequent, regular and daily activities such as media relation, publication, web…

- Events: regular and planned (see 7.1.4)

- Upgrade new building and big events: (see 7.1.4 and 7.1.5)

7.3. Budget

According to circular 128/2003/TT-BTC, company can spend 10% rational total costs on marketing activities.

Fee that HOSE collects from trading is 0.03% of trading value[9]. Revenue from trading fee makes up about 65% of total revenue.

The ratio is high because until now, HOSE has not invested on IT trading system. The situation will change in 2011 when new trading system operates (the budget for this plan is estimated US$ 34 mil.). At a result, the rate of return will decrease; it is estimated to be about 20%.

The marketing budget that can be spent maximum in theory: ...

In terms of finance, we have enough resource to cover marketing activities.

7.4. Human resources

Marketing and PR department is in charge of managing marketing activities. There are currently 06 staffs in Marketing & PR department and it plans to recruit more. In doing its function it is supported and cooperated by following departments:

- Finance and accounting

- Foreign affair relation

- Member regulation

- Listing management

- IT

- Market dissemination

- Administration

- Human resource and training

7.5. Responsibilities

01 vice general directors to be in charge of marketing activities

7.6. Accountabilities

The plan will be reviewed, evaluated and adjusted annually by marketing & PR department under the direction of vice general director in charge. It will be reported to and approved by the CEO.

8. CONCLUSIONS

HOSE is the new and immature stock exchange in Vietnam . Enjoying the favorable macroeconomic environment and experiencing quite a booming period in the last couple of years, though HOSE is now facing the global financial crisis as well as facing the competition from local stock exchange – HNX and regional stock exchanges (SGX and SET) while its attracting attribute has become vague. In that context, the right business strategy is vital in which marketing strategy is a must.

To encourage both demand and supply side to market, the marketing strategy should be build to encourage investors to invest, encourage companies to list, enhance the relationship with listing companies, maintain positive image and educate the public. That strategy then must be done through the detailed action plan.

By doing so, HOSE would achieve its objectives to maintain the leading stock exchange in Vietnam and to compete with other exchanges in the region.

[1] In order to be convenient in calculation, the exchange rate applied herein would assumable be VND/USD = 17,000

[2] “The situation of enterprises through the surveys conducted in 2005, 2006, 2007” (pg. 184) published by GSO in 2008; Statistical yearbook of Vietnam 2008 published by GSO in 2009 (pg. 81)

[3] SCIC report dated 18 Aug 2009

[4] http://clv-triangle.vn/portal/page/portal/clv_en

[5] Country profile 2008. www.eiu.com; IMF Country Report No. 09/285

[6] the number of investors at the end of 2009 is estimated to increase by 15% in comparison with that at the end of quarter II in 2009

[7] (http://tinnhanhchungkhoan.vn/RC/N/CEFEBG/nha-dtnn-so-huu-danh-muc-tri-gia-5-7-ty-US$.html).

[8]http://www2.standardandpoors.com/portal/site/sp/en/ap/page.topic/indices_vietnam10/2,3,2,9,0,0,0,0,0,0,0,0,0,0,0,0.html)

[9] Decision number 1351/QĐ-BTC

[10]

Thứ Sáu, 20 tháng 4, 2012

Chiến lược marketing cho đơn vị độc quyền

1.1. Company description

2.1. External environment analysis

a. Hanoi Stock Exchange (HNX)

b. ASEAN: Singapore, Thailand

2.2. Internal environment analysis

3.1. Opportunity

5.3. Cambodia, Lao enterprise segment (potential newcomers)

7. ACTION PLAN

Không có nhận xét nào:

Đăng nhận xét