VPS | Explore an overview of the stock market.

An overview of the stock market:

The stock market is where the issuance, exchange, and trading of various types of securities, both medium and long-term, take place. Securities are assets issued to raise capital for businesses and governments.

The stock market includes securities products listed on stock exchanges, which are used as underlying assets for the formation of options and some types of derivative securities.

1. Everything about underlying securities:

Underlying securities are securities used as the underlying assets for options and some derivative securities.

Underlying securities are divided into two main parts:

• Common stocks, including stocks traded on the HOSE and HNX exchanges.
• Bonds, including flexible bonds created to increase liquidity.

To become an underlying security, stocks or bonds must meet the conditions and criteria set by the Vietnam Securities Commission, such as:

• Must belong to the VN30, HNX30, or equivalent indices.
• Market capitalization above 5,000 billion dong.
• 25% of the trading value must be publicly and freely transferable (free float) and without accumulated losses.
• The issuing organization of underlying securities is the administrative organization. Investors will use accounts opened at brokerage firms (such as VPS Securities Joint Stock Company) to trade on the underlying market. Product terms will vary for each issued product. The issuing organization will set separate regulations for each product, and the amount issued will also be limited depending on each specific organization.
• The issuance volume is limited and will be specified within specific time frames. Underlying securities cannot be sold without holding them according to the T+3 rule.
• Minimum trading of 100 shares and a maximum of 500,000 shares per order for HOSE and 999,990 shares per order for HNX and Upcom. 
• Trading hours are from 09:00 to 11:30 and from 13:00 to 15:00. 
• There is no ownership time limit. 
• Traded in the spot market, immediate and not allowed to choose or change. 
• Tightly controlled number of listings, depending on the issuing organization, controlling the trading market. Some markets do not allow trading of underlying securities. 
• The amount needed to buy underlying securities equals the total value of the volume of securities to be purchased, meaning the buyer and seller must have 100% cash and shares available in their accounts.

2. All about derivative securities:

Derivative securities are financial instruments whose value depends on the price of an underlying asset.

Derivative securities are traded in the derivatives market, providing liquidity support to the underlying market. This includes advantages such as leveraging, fast trading, quick offsetting, and no holding restrictions. Investors can predict market trends.

• Minimum of 1 contract, maximum of 500 contracts per order. 
• Trading hours are from 08:45 to 11:30 and from 13:00 to 14:45. 
• Ownership until the expiration date at most. 
• Allow unlimited, free issuance. Regarding the position limit of derivative securities, for professional investors, it's 20,000 positions per account, for organizations it's 10,000 positions, and for individual investors it's 5,000 positions. Put up an amount of money less than the contract value and must deposit margin to ensure payment obligations.

Derivative securities include four main types: futures contracts, forward contracts, options contracts, and swap contracts.

3. Factors participating in the stock market:

• Business entities: The products of these enterprises are stocks, aimed at raising capital for their business activities.
• Investors: There are three main types of investors: institutional investors, individuals, and foreigners. Their main purpose in participating in the market is profit.
• Securities companies: Intermediaries who facilitate the brokerage of securities trading. In this case, VPS would accompany investors as a brokerage firm.
• Regulatory authorities: Entities ensuring that participants comply with regulations in this market.

4. History of the Vietnam stock market:

• In 1998, the Vietnam stock market (VNSC) was established under Decree 48/1998/ND-CP.
• In 2000, the Ho Chi Minh City Stock Exchange began operations with only 2 stock codes.
• In 2005, the Hanoi Stock Exchange was launched, focusing on auctioning state-owned enterprise equitization.
• In 2006, with the enactment of the Securities Law, the VNSC entered a period of significant transformation. Market capitalization, which was about 1% of GDP during the 2000-2005 period, experienced major fluctuations, reaching over 30% by 2015, with some periods exceeding 80%.

5. Industry groups/total number of stock codes traded on the stock market:

As of October 31, 2023, the market scale on HOSE includes 609 listed and traded securities, comprising: 394 stocks, 03 closed-end fund certificates, 14 ETF certificates, and 198 covered warrants.