Question 1 : Strengths and weakness of Markowitz theory and

1, Markowitz
a. Strengths
So, when your financial adviser or you decide to have a "diversified portfolio," with assets divided up
by percentage in different instruments and sectors -- such as 60% equities (40% large-cap, 20% small-
cap), 20% commodities, and 20% fixed income -- that's Modern Portfolio Theory. Also, when you
have to manage your own portfolio of investments, whether they be mutual funds or specific
securities within your 401K, it helps to know a bit about allocation of your investments versus
allocation or calculation of the risks. Most advisers and even fund managers will do much of the work
for you, which is why it is harder to try and do it yourself. For example, in making decisions for
investing in a company-provided 401(k), often the manager of the overall portfolio of your choices
will provide at the very least the stock or mutual fund's previous return history, and compare it with
market returns, to help you, the individual investor, decide how to allocate your investments.

A good broker or financial adviser will ask you what you think is your "risk profile" -- how much risk
are you willing to take to get how big a return on your investment? Generally speaking, younger
investors can "tolerate" more risk, because they'll have more time to make back money lost in a
downturn; older people, especially living on a fixed income, have far less risk tolerance, because they
might not have the time on earth it may take to recover from a downturn.

b. Weakness
-Markowitz's model only covers risky assets but does not cover risk-free assets
- When collecting data to apply the Markowitz theory , we need the return data of the assets under
consideration and the market rate of return. However, in reality, it is difficult to determine the rate of
return on assets, not to mention the rate of return of the market.
- The model assumes that the normal distribution data is provided, but in practice the data does not
satisfy this. As a result, the model is no longer accurate. Therefore, models such as CAPM, VAR were
invented.
2, Efficiency market hypothesis
However, the efficient market hypothesis does not convincingly explain the following phenomena:
The sharp decline in the stock price during difficult times, for example, in the US stock market
from 15 October to Black Monday October 19, 1987. When the economist James Tobin says that no
tangible factor can produce a 30 percent difference in stock values, efficient market theorists cannot
make a disparate argument.
The efficient market hypothesis proves to be true for individual stocks but not for the entire
market. The stock market in the long run has markedly self-reversing fluctuations that many
economists believe are the result of the common sentiment of most market participants. When the
market is affected by psychological waves, on the macro level no individual effort has enough
resources to reverse.
At first glance, the Efficient Markets Hypothesis - first put forward by Eugene Fama in the 1970s -
seems to be riddled with flaws. However, it also has a very important connection with the
modern investment environment that all investors should be aware of before entering the market.
One of the most hotly debated topics among investors in the stock market is whether the market is
efficient - that is, whether it fully reflects all the information available to investors. members of the
market at any given time? The Efficient Market Hypothesis (EMH) holds that all stocks are perfectly
priced according to the underlying assets of the stock and the knowledge and sources of information
available to all members of the market. All members have an equal share of ownership.
EMH principles and inadequacies
First, EMH assumes that all investors perceive all information available in the market in the same
way. However, the multitude of different methods of analyzing and evaluating stocks has raised a
series of question marks about the correctness of EMH's assumption. If one investor looking for
investment opportunities is undervalued while another investor values a stock based on its growth
potential, then surely these two investors would come to two completely different conclusions about
the fair market value of a stock. Thus, an argument against EMH points out that, because investors
value stocks so differently, it is impossible to be certain of what a stock will be worth in an efficient
market. .
Second, according to the Efficient Market Hypothesis, no single investor can achieve a higher return
than another with the same amount of investment: their equal ownership of information means with
the fact that they can only make the same profits. But consider a series of very different returns that
investors, hedge funds…have made. If no one investor has an advantage over another, then why is it
the same with mutual funds, but the statistics show that there are funds that lose heavily while others
have a profit of 50? %, even more? According to EMH, if an investor makes a profit, it means that the
entire investor community benefits. Simply, in fact, this cannot be true!
Third, according to EMH, no single investor can beat the market or exceed the average annual returns
that all investors and mutual funds achieve with their best efforts. As many market experts often
emphasize, this implies that an absolutely perfect investment strategy is simply to put all your funds
in an index fund. investors whose portfolios are tied to broad-based indices such as the S&P 500, etc.
An investment fund like this will go up and down in accordance with the overall profit or loss of
businesses. But in reality, there are always plenty of examples of investors beating the market. Not a
stranger, Warren Buffett is the best example of an investor who succeeds in staying ahead of the
market year after year.
EMH Reviews
Eugene Fama never assumed that his efficient markets would always be 100% efficient. Of course, a
market cannot always achieve maximum efficiency because it takes a certain amount of time for the
prices of stocks to react to new information being revealed to the investor community. private.
However, EMH does not provide a specific definition of how long it takes for prices to move to the
right level. In addition, in an efficient market, random events are perfectly acceptable but will always
be flattened out immediately afterward by prices moving to their usual "correct" level.
Does EMH underestimate itself in terms of random factors or possible situations? This is a very
important question to be studied! Surely those random factors must be taken into account under the
efficiency of the market. Yet, by definition, true market efficiency has and always will take these
factors into account immediately. In other words, prices must react almost instantaneously to the
release of information that could affect the investment characteristics of a stock. So, if the EMH
accepts inefficiencies, it might as well admit that absolute market efficiency is unlikely.
Increasing market efficiency
Although it is easy to throw cold water on the Efficient Market Hypothesis, the reality shows that
there are several elements of this hypothesis that are correct and are expanding. With the advent and
development of computerized systems in the analysis of stocks, companies, and transactions,
investments are gradually becoming automated on the basis of mathematical or fundamental analysis.
With the speed and power of today's information technology systems, certain types of computers can
instantly process any and all valuable information, and even turn those analyzes into a trading action
in the market in a split second.
It must be said, however, that while computers are becoming more widely used, most decisions are
still made by humans. And so, if something goes wrong, it's human error, of course. Even within an
organization, the use of analyzers is not a common practice. While success in the stock market is still
largely based on the skill of individual or institutional investors, people will continue to search for
more reliable tools to achieve high returns. than the market average.
Conclusion
It is entirely safe to say that the market will not be able to reach a perfect level of efficiency any time
soon. In order for greater efficiency to occur, the following criteria must be met: (1) a common way of
accessing advanced and high-tech price analysis systems; (2) a widely accepted stock valuation
analysis system; (3) the absolute absence of human emotion in making investment decisions; (4) all
investors are willing to accept losses or their profits are exactly the same as other members of the
market. In fact, even imagining it is hard to see the chance that any of these criteria could be met!
Question 2: What’s the difference between CAL and CML?

a. CAL
- Capital Allocation Line (CAL ) combining a risky portfolio with a risk-free asset is the
process that supports the two-fund separation theorem, which states that all investors’
optimum portfolios will be made up of some combination of an optimal portfolio of risky
assets and risk-free asset. The line representing these possible combinations of risk-free
assets and the optimal risky asset portfolio is referred to as the Capital Allocation Line
(CAL).
-The slope of the CAL, equals the increase in the expected return of the complete portfolio
per unit of additional standard deviation - in other words, incremental return per incremental

b. CML
- Capital market line (CML) represents portfolios that optimally combine risk and return.
- The market portfolio is a portfolio of all assets currently traded on the market. CAMP points
out that CML is the best possible equity allocation for all investors. The market portfolio itself
is an effective portfolio, which is the result of a process of buying and selling stocks until the
equilibrium is reached, so passive investors can invest in this portfolio and ytam. That all
other active investors will have a less effective CAL capital allocation curve than the CML
capital market that passive investors currently own. In other words, supply and demand in
the market made the strategy of passive mobile phone management attractive to many
investors.
- CML is a capital allocation unit from a bank consisting of 1-month Treasury bills and an
index of many market shares (such as the S&P 500 index).

=> In conclusion: When assuming there is homogeneity in terms of expectations of all the
investors which will lead to each investor construct the same CAL, this is called the
CML(Capital Market Line). Essentially, CML is a special case of CAL where the optimal
portfolio is the market portfolio.

Q3 : Distinguishing SML-CML
 CML SML

Capital Market Line Security Market Line

Only applying for efficient portfolios Applying for both effective portfolio and
individual assets

Shows the correlation between risk and Shows the linear function relationship
expected return of efficient portfolios (a between expected return and risk for each
portfolio that combines risk-free assets with individual securities.
market portfolios)

Draw in a plane with two axes is the Draw in a plane with 2 axes is the expected
expected rate of return and total risk (r and Ϭ). rate of return and the systematic risk (r and β)

When investors are allowed to borrow and Regardless of whether investors can borrow
lend at a risk-free rate , the CML line is linear or lend at a risk-free rate, the SML line is still
and has a positive slope. linear and has a positive slope

Only the efficient portfolio is on the CML All reasonably valued individual securities
and portfolios are on the SML

Question 4: What are the steps to determine an optimal overall portfolio

Step 1: Allocate invested capital on the portfolio between risk assets and risk-free
assets
This is the most important content in defining a portfolio . Investors can determine the capital
ratios for risk assets and risk-free assets, determine the proportions of the assets in the
portfolio, so they can manage risk more easily.
An investor when investing in a portfolio instead of in individual assets, must pay attention to
the relationship between risk and return of that portfolio. Next, the investor will have to
determine the investment proportion for each asset in the portfolio. The set of scores
representing the combination of return and risk of a portfolio consisting of risk assets and
risk-free assets is the capital allocation line (CAL).
Step 2: Distribute the invested capital on the portfolio among risky assets
The risk portfolio is defined to provide the lowest possible risk versus a given expected
return.
First, we define the risk-return levels from the set of risky assets to determine the
effective frontier of the known risky assets
Investors tend to avoid risks unless they are well compensated. An investor always weighs
between risk-free assets and speculative positions that can yield high returns. A portfolio is
attractive when it offers high returns and low risk.
Second, determine the optimal portfolio of risky assets. Finding an optimal risk portfolio
is determining the proportion of risk assets in the portfolio to create the steepest CAL curve,
tangent to an effective frontier . The contact point between the effective frontier and the CAL
is the optimal risk portfolio.
Step 3: Determine the optimal overall portfolio
This is a portfolio that combines a risk-free asset with an optimal risk portfolio. Investors
must base their risk aversion to choose a combination ratio between two types of assets. A
utility model provides the optimal point of capital allocation between a risk portfolio and a
risk-free asset.

Question 5: Is the CAPM model used in Vietnam? If yes, are there any adjustments?
The results of many studies for a long time have proven that the application of basic analysis
models and technical analysis to forecast stock returns is very necessary for professional
investors , but an ongoing fact is the absence of these forecasting tools in the stock market
of Vietnam. The majority of investors on the information today are still making emotional
investment decisions.
CAPM is not the only model that predicts returns, but it has a solid theoretical foundation. In
recent studies, CAPM model has added other factors to be able to predict the rate of return
more accurately. The improved CAPM model is an attempt to find tools such as the P / E
and P / B ratios to predict average long-term market returns. However, the application of this
model to the forecasting of returns on emerging markets in general and in the Vietnamese
stock market, in particular, will have certain limitations.
First, the goods on the Vietnamese stock market are too poor in types, few in quantity, and
especially the lack of high-end goods for investors to be assured of long-term investment.
Therefore, the Vietnamese stock market has not yet been attractive to investors, especially
professional investors with large resources.
Second, the lack of beta coefficient in the risk analysis of securities, in other words, investors
have not paid attention to this coefficient in stock assessment, most of them are only
interested in the General financial ratios related to profitability (ROE, net profit / revenue ...)
or debt situation, or to stock prices and profits (P / E ..)
Third, forecasting models are only operated well when investors have the same information,
information is not leaked, and therefore information transparency is a prerequisite to decide
the stock market. contract.
In addition, a number of other studies have proposed improvement using the so-called
conditional CAPM, which is a model based on the principle that the beta coefficient of the
CAPM itself varies with state and, respectively, probability to appear.
Others suggest using additional risk factors that may not actually reflect the market factor of
the CAPM such as firm size, Market-Price-Book Index, etc. "Can help clarify many things, a
very good book.

Question 7: 6 step to build a discounted cash flow model to valuate a business

The premise of the DCF model is that the value of a business is purely a function of its future
cash flows. Thus, the first challenge in building a DCF model is to define and calculate the
cash flows that a business generates. There are two common approaches to calculating the
cash flows that a business generates.

1. Unlevered DCF approach

Forecast and discount the operating cash flows. Then, when you have a present
value, just add any non-operating assets such as cash and subtract any financing
related liabilities such as debt.
2. Levered DCF approach
Forecast and discount the cash flows that remain available to equity shareholders
after cash flows to all non-equity claims (i.e. debt) have been removed.

Both should theoretically lead to the same value at the end (though in practice it’s actually
pretty hard to get them to be exactly equal). The unlevered DCF approach is the most
common and is thus the focus of this guide. This approach involves 6 steps:

1. Forecasting unlevered free cash flows

Step 1 is to forecast the cash flows a company generates from its core operations after
accounting for all operating expenses and investments. These cash flows are called
“unlevered free cash flows.”

2. Calculating terminal value

You can’t keep forecasting cash flows forever. At some point, you must make some high
level assumptions about cash flows beyond the final explicit forecast year by estimating a
lump-sum value of the business past its explicit forecast period. That lump sum is called the
“terminal value.”

3. Discounting the cash flows to the present at the weighted average cost of capital
The discount rate that reflects the riskiness of the unlevered free cash flows is called the
weighted average cost of capital. Because unlevered free cash flows represent all operating
cash flows, these cash flows “belong” to both the company’s lenders and owners. As such,
the risks of both providers of capital need to be accounted for using appropriate capital
structure weights (hence the term “weighted average” cost of capital). Once discounted, the
present value of all unlevered free cash flows is called the enterprise value.

4. Add the value of non-operating assets to the present value of unlevered free cash
flows
If a company has any non-operating assets such as cash or has some investments just
sitting on the balance sheet, we must add them to the present value of unlevered free cash
flows. For example, if we calculate that the present value of Apple’s unlevered free cash
flows is $700 billion, but then we discover that Apple also has $200 billion in cash just sitting
around, we should add this cash.

5. Subtract debt and other non-equity claims

The ultimate goal of the DCF is to get at what belongs to the equity owners (equity value).
Therefore if a company has any lenders (or any other non-equity claims against the
business), we need to subtract this from the present value. What’s left over belongs to the
equity owners.

Often, the non-operating assets and debt claims are added together as one term called net
debt (debt and other non-equity claims – non-operating assets). You’ll often see the
equation: enterprise value – net debt = equity value. The equity value that the DCF spits out
can now be compared to the market capitalization (that’s the market’s perception of the
equity value).

6. Divide the equity value by the shares outstanding

The equity value tells us what the total value to owners is. But what is the value of each
share? In order to calculate this, we divide the equity value by the company’s diluted shares
outstanding.

Example:Thế giới di động coporation MWG

Model assumption
Risk premium 10,38%
Cost of debt Kd 6,00%
Beta 0.59
Risk free rate 2,76%
Cost of equity 13,21%
Tax 22%
WACC 2020 8,98%
Growth rate g 1,0%
Time 10 years

Valuation MWG by FCFF model at the time of December 2020

Required rate of return 8.96%

Long-term cash flow’s growth rate 1%

Firm Value 61,952,984

(+) Cash 703,090

(-) Long term debt and short term debt 14,153,152

Market value/ Value of equity 48,502,922

Number of outstanding stock 452,817,426

Price per share 107,114

Valuation MWG by FCEE model at the time of December 2020

Value of equity 46.523.588

Price per share 102.742

Question 11: Analyze the assumptions of technical analysis. Comment on the
practicality of those assumptions.
1. Basic Assumptions: Technical analysis is the study of market movements, mainly
through the use of charts for the purpose of predicting future price movements. The term
“market volatility” refers to the three main volatility factors that inform Technical Analysis:
price, volume, and the number of outstanding contracts.
There are three assumptions underpinning the approach to Technical Analysis: - Market
volatility is all-inclusive; Price tends to move in trends; History will repeat itself.

Market price reflects both rational and irrational investor behavior: This can be considered
the foundation of Technical Analysis. Technical analysts consider any factor that has the
ability to affect the price such as psychological, political or financial factors of a business or
organization. . . are clearly reflected in market prices. Therefore, some people argue that
studying price action is all we need and really can't argue with this idea.
It is based on the idea that prices are determined by the interaction of supply and demand.
Technical analysts point out that when prices rise for whatever reason, demand must exceed
supply and the market goes up. We all know and agree that the main drivers of supply and
demand are the basic economic factors that make up the Bull Market or the Bear Market,
and the graph does not by itself make the market move up. or down. Graphs can only reflect
market conditions.

Price moves with the trend: The concept of a trend is a very important concept in Technical
Analysis, so it is important to understand this assumption carefully before you want to dig
deeper into it. The purpose of creating charts depicting price movements in the market is to
identify price trends early, and then enter trades on the basis of these trends. In fact, the
techniques here are all about repeating pre-existing price trends, that is, the purpose of
Technical Analysis is to determine the repetition of price movements that have appeared in
the past to take advantage of experience and make appropriate decisions.
From this assumption we also have the corollary that "a moving price trend will continue to
follow its trend and rarely reverse". This consequence is derived from Newton's first law of
motion, so it is another way to state it as follows: "a trend in motion will continue to follow its
trend until it reverses". In general, all studies aimed at approaching trends are to follow the
current price trends until there are signs of reversal.

History will repeat itself: Much of the content of Technical Analysis and the study of market
volatility has to do with the study of human psychology. Such as price patterns, these
patterns have been identified and proven for more than 100 years, they are like pictures of
price movement graphs. These pictures show whether the market sentiment is bullish or
bearish. The application of these models has worked well in the past and is assumed to
continue to be effective in the future because they are based on research analysis of human
psychology that is often not. change. Thus this assumption can be stated as: "The key to
grasping the future lies in studying the past" or "the future is merely a repetition of the past".

2. The practicality of the above assumptions

Prediction in fundamental analysis as opposed to in technical analysis
While Technical Analysis focuses on the study of market movements, Fundamental Analysis
focuses on the economic dynamics of supply and demand - the causes of price movement.
Fundamental analysis approaches the analysis of relevant factors affecting market prices in
order to determine the true value of a security - the value is determined through supply and
demand and finally to determine markets sell above actual value (overprice) and market
points sell below true value (underprice). Both fundamental and technical approaches aim to
identify trends in which prices can move, but the approach is different: fundamentalists study
the causes of price fluctuations. market movements while Technical Analysts study the
impact of those movements.

Some investors consider themselves fundamental or technical, but in reality there is a lot of
overlap: many fundamental analysts apply the principles of technical analysis in their work.
while most of the Technical Analysts have more or less followed the Fundamental Analysis
period.

Often at the beginning of some important market movements fundamental analysts do not
explain and do not support what the market is about to do. It is at these sensitive moments
that the two schools of analysis appear to differ most. These two schools will eventually be
similar in some ways, but if any investor wants to rely on those points as a solid basis for
their decisions, it will be too late.

One explanation for this contradiction is that “market prices act as a guide for
fundamentalists” or it can be said that market prices are a guide for fundamental analysts.
Those who have studied Technical Analysis can see that price changes have an impact on
the market, or they have followed the rhythm of the market, while those who follow
fundamental analysis are influenced by the market. those fluctuations. Historically recorded
strong bulls and major bear markets are often due to the unawareness or little awareness of
market changes and until such movements are widely recognized. then it has already
changed direction and moved in another direction.

Analyze and choose a time that can be opposed to each other

Back to Technical Analysis, the decision making process can be divided into 2 phases:
analysis and timing. For markets with a large "leverage effect", such as the futures market
(the market has derivatives such as: futures - futures and options - Options), the timing of
Participating in is very important because there are cases where you have analyzed and
followed the market situation properly but you could still lose your money. Even if the deposit
for the futures market is small (only about 10%), even a very small amount of price
movement in the wrong direction can have the effect of driving investors out of the market
and losing all their money. that deposit. In contrast, in stock market trading, when an investor
finds himself deviating from the market for a certain stock, he simply holds the stock and
waits until the stock returns to the market trend. Those who invest in the futures market will
not have that privilege. The “buy and hold” strategy cannot be used to make profitable
investments in the futures market.

We can apply fundamental or technical analysis, but when it comes to answering the
question of determining when to enter or exit the market, the answer lies entirely in
Technical Analysis. Timing is very important in deciding whether to buy or sell. Therefore,
when looking at the investor's steps before making a final decision, it can be seen that the
application of the principles of Technical Analysis is indispensable at some point in the
decision-making process. decide whether at the beginning of this process when conducting
analysis investors can apply fundamental analysis.

Question 12: State the contrast between the assumptions of technical analysis and
the theory of efficient markets

For the repeating history theory, this efficient market theory holds that current stock prices
are a complete reflection of all weak form information of the stock market (past information),
including levels past prices, past returns or changes in prices or yields at different points in
time... In a weak form efficient market, the current market price already reflects all earnings
in the past and all information in the market, so this hypothesis means that the return - the
return on the security in the past as well as other information has no relationship with the
future (the returns are independent of the future). together). In other words, it is not possible
to predict future stock prices or to make superior returns on the basis of similar past
information. The efficient market hypothesis (EMH) contradicts the basic tenets of technical
analysis by saying that past prices cannot be used to predict future prices in a way that can
be profitable. It therefore assumes that technical analysis cannot be effective. Economist
Eugene Fama published a seminal article on EMH in the Journal of Finance in 1970, and
said "In the short term, the evidence supporting the efficient market model is extensive, and
(somewhat) unique in economics) contradictory evidence is sparse." Technical analysts say
that EMH ignores the way markets work, in which many investors base their expectations on
past earnings or track record, for example. Because future stock prices can be strongly
influenced by investor expectations, technicians argue that it follows only past prices that
influence future prices. They also pointed to research in the field of behavioral finance,
particularly those who were not reasonable participants from whom EMH excluded them.
Technical analysts have long argued that irrational human behavior affects stock prices, and
that this behavior leads to predictable outcomes. Author David Aronson says that behavioral
finance theory blends with the practice of technical analysis If all market participants
accepted the efficient market hypothesis, they would probably not be interested in new
information and then prices will not fully reflect this information. However, efficient market
theorists argue that not everyone reacts in the same way, and that if that is the case, there
will be those who gain surplus profits on the basis of old information. Many people will do the
same thing and the market will return to an efficient state as a result. In short, the efficient
market is a self-monitoring and steady-state mechanism. Among the market participants will
be some that are either more agile, smarter or have a lot of resources to gather information
to minimize the possibility of future anomalies, what will happen? The answer is that there
are many such people in the market and the competition between them will create a self-
balancing and controlling mechanism so that there is no high surplus profit. However, a very
few people with special acumen and abilities can earn higher profits than the rest. However,
the efficient market hypothesis does not convincingly explain the following phenomena: The
sharp decline in stock prices at certain points in time, for example, has occurred in the US
stock market since October 15 to Black Monday October 19, 1987. As the economist James
Tobin[5] said: there is no tangible factor that can create a difference of 30% in the value of a
stock. efficient market theorists cannot make a counter argument. The efficient market
hypothesis proves to be true for individual stocks but not for the whole market. The stock
market over the long term has markedly self-reversing movements that many economists
believe are the result of the general sentiment of most market participants. When the market
is affected by psychological waves, on a macro level, no individual effort has enough
resources to reverse. These limitations of the efficient market hypothesis have prompted
research to lead to the theory of behavioral economics in general and behavioral finance in
particular.

Question 13: Describe the difference between technical analysis and fundamental
analysis
Fundamental Analysis
A method of analyzing stocks based on fundamental factors that affect or lead to changes in
stock prices to indicate the intrinsic value of stocks in the market.
The basic factors that need to be studied include: analyzing basic information about the
company; analysis of the company's financial statements; analysis of the company's
business activities; analyze the industry in which the company is operating; and analyze
macroeconomic conditions that generally affect stock prices. After doing the research, the
analyst is tasked with making predictions for important metrics such as expected earnings,
book value per share, fair value of the stock, valuations, etc. as well as recommending
buying/selling stocks in the market.

Specifically, the factors to focus on in fundamental analysis of stocks are:

• Business activities of the company
• Company's mission and goals
• Profitability (current and estimated)
• Demand for the company's products and services
• Competitive pressure and pricing policy
• Business results over time
• Business results compared with similar companies and with the market
• Position in the industry
• Quality management

From a general perspective, fundamental analysis can be used according to the analysis
method from macro factors to micro factors affecting stocks (often called top-down method)
including 5 levels. as follows:
• Analysis of macroeconomic conditions
• Financial and securities market analysis
• Analyze the industry in which the company is operating
• Company analysis
• Stock analysis

In fact, depending on the goal and analytical ability, the analyst can use one of the five levels
of analysis mentioned above. For example, in the analysis of the company, we can use the
non-financial analysis method; it is an assessment of the enterprise management apparatus,
of human resources, of the ability to develop new products, of market and market share, of
competitiveness... Also in company analysis, an analyst can uses an approach commonly
known as the SWOT method, with the identification and assessment focused on the
following four aspects of the company:
• Strengths (Strengths)
• Weaknesses (Weaknesses)
• Opportunities (Opportunities)
• Challenges (Threats)

As a quick way of analyzing stocks, investors can classify stocks into six basic categories
based on the nature of their earnings: top stocks (blue-chips), growth stocks ( stable and
explosive), defensive stocks, cyclical stocks, seasonal stocks.
Particularly in the most core and most difficult level is stock analysis, the essence of
fundamental analysis here is the valuation of a stock in order to predict the intrinsic value of
that stock. With this goal, there are usually five methods of stock valuation:
• Valuation method based on dividend flow
• Valuation method based on cash flow
• Valuation method based on P/E . ratio
• Methods based on financial ratios
• The valuation method is based on net assets.

COMPARE
While Technical Analysis focuses on the study of market movements, Fundamental Analysis
focuses on the economic dynamics of supply and demand - the causes of price movement.
Fundamental analysis approaches the analysis of relevant factors affecting market prices in
order to determine the true value of a security - the value is determined through supply and
demand and finally to determine markets sell above actual value (overprice) and market
points sell below true value (underprice). Both fundamental and technical approaches aim to
identify trends in which prices can move, but the approach is different: fundamentalists study
the causes of price fluctuations. market movements while Technical Analysts study the
impact of those movements.

Some investors consider themselves fundamental or technical, but in reality there is a lot of
overlap: many fundamental analysts apply the principles of technical analysis in their work.
while most of the Technical Analysts have more or less followed the Fundamental Analysis
period.

Often at the beginning of some important market movements fundamental analysts do not
explain and do not support what the market is about to do. It is at these sensitive moments
that the two schools of analysis appear to differ most. These two schools will eventually be
similar in some ways, but if any investor wants to rely on those points as a solid basis for
their decisions, it will be too late.
One explanation for this contradiction is that “market prices act as a guide for
fundamentalists” or it can be said that market prices are a guide for fundamental analysts.
Those who have studied Technical Analysis can see that price changes have an impact on
the market, or they have followed the rhythm of the market, while those who follow
fundamental analysis are influenced by the market. those fluctuations. Historically recorded
strong bulls and major bear markets are often due to the unawareness or little awareness of
market changes and until such movements are widely recognized. then it has already
changed direction and moved in another direction.

Compare the two methods

Fundamental analysis as mentioned above is completely based on inputs and subjective
analytical capabilities. As a result, the same stock can have many different analyses and
judgments, and fundamental analysis is often seen as ignoring investment sentiment.
However, fundamental analysis is the leading and indispensable method in stock investment
analysis and serves as a relatively solid basis for making investment decisions. About 90%
of investors use fundamental analysis (Arshad Khan and Vaqar Zuberi, 1999, Stock
Investing for Everyone, page 85). That's why the world-famous training programs on
investment analysis are CFA (Chartered Financial Analyst - popular in the US) and CIIA
(Certified International Investment Analyst - popular in Europe) also completely contain the
content The content is for fundamental analysis and does not include technical analysis.

On the technical side, because this method is based on the behavior of stocks, they are
short-term tools and should not be used for long-term analysis. However, technical analysis
also attracts a significant number of investors. In many countries, technical analysts often
converge in the Market Technicians Association and also organize standardized technical
analysis exams according to the following programs. The process is called CMT (Chartered
Market Technician) Some scholars believe that fundamental analysis studies the causes of
stock price fluctuations in the market to answer the question "why happens and happens"
what is in the stock price", while technical analysis studies its effects to answer the question
"when will the stock price change begin and when will it end". In other words, the technical
analyst only needs to know what the effect is, without worrying about the cause of the
situation; The fundamental analyst always needs to know why.

From an investment perspective, combining both fundamental and technical analysis

methods seems to yield the best combined results. That requires considerable time,
understanding and analysis level of investors and it is not an easy job.

Câu 6 : Trình bày các quan điểm cơ bản trong định giá. VD minh họa

6 points of view

First, we must admit one thing: every asset, whether financial or non-financial, has a value of its own.
Therefore, any property can be valued, although the level of difficulty - ease will vary from case to
case.

The valuation process must be objective

The models used for valuation are quantitative, but the inputs depend a lot on the subjective judgment
of each person in choosing the input information, so the final result The end that these models bring
has been distorted . In fact, sometimes the price is set first and then the value is determined

Example: When a company is faced with negative news or rumors that will make their shares lose
their true value and will be undervalued by the market even though these stocks are still good. and has
growth potential. This can greatly affect the company's production and business activities, however,
the shares of that company can quickly regain its true value when the rumors are resolved. That is the
opportunity for value investors.

Overcome
+ To solve this problem, all subjective factors need to be eliminated before starting to price or can be
considered as "ignoring the crowd", A seemingly simple thing but very few analysts can do. For
example, when the market is euphoric and then stocks are often overvalued and vice versa.

+ Minimize the interests of the subject (the object to be valued). If even in the case of high or low
valuations, assuming they do not benefit from this outcome, the Analyst's Valuation Process will not
be under pressure.

Valuation value is affected by many different factors

With the constant flow of information in the financial markets, a company's value quickly becomes
outdated and must be updated to properly reflect existing information.

There are 3 main areas of impact of information:

+ Internal information of the enterprise: Business results or strategic changes of management.

Information affecting the valuation of companies in the same industry: Policies affecting the industry.
For example, Health reform or Drug price management will be bad news for the pharmaceutical
industry in the future, which will have to adjust pricing models.

+ Information on Economic Situation & Interest Rates (A common impact on all valuation reports):
eg An economy showing signs of recession prompts us to reassess “growth rate” “comprehensively
(especially for cyclical companies)

A good valuation will give an accurate estimate

Valuation results are influenced by assumptions we make about the future of “the company & the
economy”. It is unrealistic to demand absolute certainty in valuation because of cash flow or The
discount rate is also an estimate. Therefore, no valuation result can accurately reflect 100% of the
value of the business, and each analyst must set a reasonable margin of error for himself.

About “accuracy”: Accuracy is very different from investment to investment:

Valuing a large company with a long financial history will often be more accurate than valuing a
young company with a lot of internal turmoil over time.

+ Valuing an emerging market company is always more difficult than an established market company
due to disagreement and uncertainty (uncertainty) about the future of the market

+ Valuing a start-up company is more difficult than an established company with established market
share

The crux of this view: The more “stable” the conjecture is, the more “accurate” the prediction is.

For example: in the Vietnamese stock market, the Valuation Process will yield more accurate results
if valuing a company with a long financial history like Vietnam Dairy Products Joint Stock Company
Vinamilk compared to valuing a company with a long financial history. A new dairy company
established in 2009 such as TH true milk, although until now, TH's products have been widely
covered in the Vietnamese dairy market.

The more complex the model, the more accurate the valuation results are

Obviously, the more mature the model, the better valuation results can be obtained. However: A more
complex model also means that the amount of input information tends to increase and the possibility
of error in information is also greater.
For example: For the selection of input information in the valuation process, If too much data from
different sources is used without careful selection, the valuation process will be difficult. Difficult
because these sources of information may not be accurate, the information may conflict with each
other, creating misleading and inaccurate valuation results.

To make money from pricing, you must assume that the market is not efficient

When conducting a certain valuation one implicitly assumes that the market is making mistakes and
believes that the market is not efficient only in the short term and always expects the market to be
efficient in the near future (price stock returns with intrinsic correctness). When the market is not
efficient, this will create an incentive to look for securities that are overvalued or undervalued in the
market and investors will buy and sell at those prices, from which the market can buy and sell.
schools will return to efficiency and that is how they make money .

Example: When investors believe the market is inefficient, and they learn that a company's stock is
undervalued relative to its true value (perhaps due to negative or bad news). caused by rumors),
investors will proceed to buy shares of this business, and wait until the rumors are extinguished, then
the stock price of the business will return to its true value, at Then, the investor will sell the securities
and make money from the difference.

What matters is not only the outcome (value) but also the valuation process

Analysts often give too much importance to the results (whether the company is overvalued or
undervalued) without noticing that the valuation process also tells us a lot of important issues arise. It
helps us answer some questions like:

+ What is the price to pay for a high growth rate?

+ How important is the increase in profit margin?

+ How does profit margin affect asset value?...

Example: Being too focused on results without paying attention to the valuation process will cause
investors to overlook a few important details that can directly affect their earnings if they only focus
on Go to a company with a high growth rate and decide to invest in this company regardless of its
dividend policy, a high growth rate may mean that the company has to spend a large amount of
capital. large investments, so they will have to deduct from dividends paid to shareholders to reinvest,
which will make the dividend payout ratio lower, directly affecting the income of shareholders.
majority of this company.

Overall, from Damodaran's views, it can be seen that valuation plays a very important role, especially
for fundamental analysts or value investors. Valuation tells us somewhat of the intrinsic value of a
business, and any deviation from the true value indicates that the stock is undervalued or overvalued.

Question 8 :
*For the first 6 months of 2021, Vietnam economy growth far despite the CoVID-19 pandemic
Gross domestic product (GDP) in the first 6 months of 2021 increased by 5.64%, although the Covid-
19 epidemic broke out in some localities across the country from the end of April, showing the drastic
management of the Government together with the political system, business community,people of the
country especially the frontline force against the epidemic to control the epidemic, carry out tasks and
solutions for socio-economic development.

Gross domestic product (GDP) in the first 6 months of 2021 increased by 5.64%, higher than the
growth rate of 1.82% in the first 6 months of 2020 but lower than the growth rate of 7.05% and 6.77%
of the same period in 2018 and 2019. In the general growth rate of the whole economy, the
agriculture, forestry and fishery sector increased by 3.82%, contributing 8.17% to the overall growth;
the industry and construction sector increased by 8.36%, contributing 59.05%; the service sector
increased by 3.96%, contributing 32.78%.

On the supply side of the economy

(1) The agriculture, forestry and fishery sector in the first 6 months of 2021 increased significantly
compared to the same period last year due to high yield of winter-spring rice, stable development of
livestock and aquaculture, agricultural products and seafood mainly increased. The reason is that the
weather in the first months of this year is favorable, besides that, localities have actively prevented
saltwater intrusion effectively, applied a traceable production model to ensure a basis of trust for
consumers. export agricultural products are priced.

– The yield of winter-spring rice is 68.3 quintals/ha, an increase of 2.6 quintals/ha compared to the
previous year's winter-spring crop and is the highest yield ever; output reached 20.55 million tons, up
673.1 thousand tons. Some localities have high yield of winter-spring rice: Hau Giang reaches 78.2
quintals/ha; Phu Yen reached 77.9 quintals/ha; Bac Lieu reached 77.3 quintals/ha; Kien Giang
reached 76.2 quintals/ha; An Giang reached 74.7 quintals/ha; Dong Thap reached 73.2 quintals/ha;
Thai Binh reached 71 quintals/ha. Some localities have increased winter-spring rice production
compared to the previous year's winter-spring crop: An Giang increased by 74.9 thousand tons, Kien
Giang increased by 43.8 thousand tons, Long An increased by 28.4 thousand tons, Ca Mau increased
by 24 ,1 thousand tons, Ha Tinh increased by 23.9 thousand tons, Thanh Hoa increased by 21.7
thousand tons.

– The livestock industry has grown quite well, it is estimated that the total number of pigs in the
country by the end of June 2021 will increase by 11.6% compared to the same period in 2020; the
total number of poultry in the country increased by 5.4%. Output of live pigs for slaughter in 6
months reached 2002,2 thousand tons, up 8.1% over the same period in 2020; production of live-
weight poultry meat for slaughter reached 932.2 thousand tons, up 6.06% (in the second quarter
reached 450.5 thousand tons, up 6.12%); poultry egg production reached 8.4 billion eggs, up 5.0% (in
the second quarter reached 4.0 billion eggs, up 5.6%).

– Export turnover of a number of agricultural and aquatic products in the first 6 months of 2021
compared to the same period in 2020 increased sharply, of which: Seafood reached US$ 4,054
million, up 12.5%; vegetables and fruits reached 2.1 billion USD, up 17.7%; cashew nuts reached
USD 1,652 million, up 11.1%; rubber reached 1.1 billion USD, up 80%; pepper reached USD 499
million, up 40.5%; ;… . Total export turnover of agricultural and forestry products in the first 6
months of the year reached 11.57 billion USD, up 15.7% over the same period last year.

(2) Industrial production in the second quarter of 2021 grew quite well because business activities of
enterprises were gradually recovering, the growth rate of added value reached 11.45% over the same
period last year. Processing and manufacturing industries attract a lot of foreign direct investment;
Large corporations are interested in investing in Vietnam, mainly in the field of manufacturing
electronic components and products. In addition, some new capabilities will be added to the economy
in the first 6 months of 2021. Specifically: High-tech garment manufacturing factory of Garment 40
Joint Stock Company in Thai Binh with the required capacity 3 million products/year; Ngoc Te Shoes
Co., Ltd in Hung Yen with 2 million products/year; Garment factory, yarn production in Nam Dinh
with 15,000 products/day; Apparel Tech Ha Tinh export garment factory with 100,000 products/year;
Techworld industries Vietnam Co., Ltd (manufacturing electrical and lighting equipment) with 958
thousand products/year…

– Some key industries in the first 6 months of the year had high IIP index such as:

+ Textile industry increased by 8.6% over the same period last year, the production of twine from
natural fibers increased by 13.4%; synthetic silk products increased by 5%.

+ Apparel manufacturing industry increased by 8.9% because in 2020 the garment industry was
heavily affected by the Covid epidemic. In 2021, garment enterprises will gradually overcome the
difficult period, receive many orders and make good use of opportunities from free trade agreements.

+ Production of coke and refined petroleum increased by 3%: Output of motor gasoline products
increased by 5.5%. In which, output of Nghi Son Refining and Petrochemical Company - Thanh Hoa
increased by 2.7%; Binh Son Refining and Petrochemical Company - Quang Ngai increased by 8.2%.

+ Metal production increased by 37%: Hung Nghiep Formosa Ha Tinh Iron and Steel Company
Limited (FHS) in the first months of 2021 operated stably and had a relatively high growth rate.
Production of iron and non-alloy steel products in casting or other raw forms increased by 20.4%;
Stainless steel products in form g semi-finished products increased by 35.8%.

+ Production of machinery and equipment increased by 17.2%, of which the following products had a
high growth rate: Printers used in offices increased by 12.7%; Parts of computers, cash registers,
stamping machines, ticket machines increased by 13.7%; air conditioner products increased by 18.5%
….

+ Motor vehicle production increased by 33.1%: Motor vehicle products carrying less than 10 people
increased by 37%, of which Toyota Vietnam and Honda Company increased 50.5% in 6-month
output; Vinfast Co., Ltd.'s output increased by 73.6% due to the fact that the business took the
initiative and had a plan to adapt to the Covid-19 epidemic to maintain production and business.
Vehicles with internal combustion engines carrying 10 people or more of Truong Hai Automobile
Manufacturing and Assembling Company Limited in 6 months increased by 111.1%…

(3) Transport of goods is maintained when production and business activities strive to effectively
implement the "dual goals" of the Government. Cargo in June increased by 8.6% in volume and 9.4%
in volume compared to the same period last year. Generally in the first 6 months of 2021, freight
transportation increased by 11.5% over the same period last year (the same period in 2020 decreased
by 7.8%) and rotation increased by 11.3% (the same period last year decreased by 7%). ). Airway
alone still faces many difficulties with transportation volume down 26% and rotation down 51.8%
compared to the first 6 months of 2019 (the year without the Covid-19 epidemic).

(4) Import turnover in the first 6 months of 2021 increased by 36.1%, mainly importing means of
production accounting for 93.9% of total turnover (up 36.7% over the same period last year), in
which, machinery machinery and equipment increased by 33%, raw materials increased by 40.2%, a
higher growth rate than imports of consumer goods (up 28%) showing signs of recovery in
production.
(5) The business sector still recorded an increase in the number and capital of newly registered
enterprises, showing the efforts and entrepreneurial spirit of the business community. Newly
registered enterprises in the first 6 months of 2021 reached 67.1 thousand enterprises[1], an increase
of 8.1% over the same period last year and an increase of 34.3% in registered capital. The total
number of newly established and re-operated enterprises reached 93.2 thousand enterprises, an
increase of 6.9% over the same period in 2020 (of which the number of enterprises returning to
operation reached 26.1 thousand enterprises). , up 3.9%); On average, every month there are 15.5
thousand newly established and re-operated enterprises. Some localities were heavily affected by the
fourth Covid-19 outbreak but still saw an increase in the number of newly established businesses
compared to the same period last year, such as Bac Giang with an increase of 11.82%; Ho Chi Minh
City increased by 5.34%; Bac Ninh increased by 1.06%.

(6) In the first six months of 2021, the labor force working in the economy still increased compared to
the same period last year, the unemployment rate in the working age decreased and the income of
salaried workers increased. Laborers aged 15 and over working in the first 6 months of 2021, an
increase of 788.7 thousand people compared to the same period last year; unemployment rate in
working age decreased by 0.07 percentage points; income of salaried workers increased by 281.7
thousand dong.

On the demand side of the economy

(1) Total retail sales of consumer goods and services: Although affected by the Covid-19 epidemic, in
the first 6 months of 2021, total retail sales of consumer goods and services increased. 4.9% over the
same period last year (the same period in 2020 decreased by 1.1%). Retail sales of goods in 6 months
was estimated at 1,985.4 trillion VND, accounting for 80.6% of the total and up 6.2% over the same
period last year (in the same period in 2020 it increased by 3.6%). Although sales in June decreased
slightly, retail sales of goods in the first 6 months of the year still increased compared to the same
period last year: Hanoi increased by 2.1%; Hai Phong increased by 5.9%; Da Nang increased by
7.4%; Ho Chi Minh City increased by 1.7%; Can Tho increased by 6.9%. The main reason is due to
the implementation of social distancing nationwide in April 2020, so people also limit going out to
shop (sales in April 2020 was quite low at 87.29%). In addition, the revenue of a number of
commodity groups such as food and food accounted for 33% of the total retail sales of goods, up
7.8%, because this is a group of essential goods to ensure daily life. people's day.

(2) Realized investment capital of the whole society in the first 6 months of 2021 at current prices is
estimated at 1,169.7 trillion VND, up 7.2% over the same period last year, much higher than the 3%
increase in 2020. This increase reflects the results of solutions to promote the disbursement of public
investment capital and the effectiveness of the State's support policies for the business community.
Total registered FDI only decreased slightly by 2.6% over the same period last year, but realized FDI
increased by 6.8% in the context of complicated developments of the Covid-19 epidemic in many
countries, showing that investors Foreign investors have considered Vietnam as a safe destination for
investment due to Vietnam's success in disease control and macroeconomic stability in recent times.

(3) Merchandise export turnover in the first 6 months reached US$157.63 billion, up 28.4% over the
same period last year. There are 25 items with export turnover of over 1 billion USD, accounting for
88.9% of total export turnover; Export of key products still maintained stable growth and at a good
growth rate, export turnover to major markets and markets with FTAs with Vietnam achieved growth
compared to the same period in 2020. The demand for goods on the world market is recovering, this is
an opportunity for Vietnam to boost exports, especially businesses that make good use of the signed
Free Trade Agreement.

Inflation is under control, the consumer price index (CPI) in June 2021 increased by 0.19% compared
to the previous month, increased by 1.62% compared to December 2020 and increased by 2.41%
compared to June. 2020. On average, in the first 6 months of 2021, CPI increased by 1.47% over the
same period last year, the lowest increase since 2016; core inflation in 6 months increased by 0.87%.

However, in addition to the achieved results, entering the third quarter, our country's economy -
society still faces many difficulties and challenges, especially the Vietnamese economy has a large
openness, so it is affected. interwoven in many aspects by the increasingly complex and unpredictable
international economic situation. Although vaccination against Covid-19 is strongly implemented by
many countries around the world, differences between vaccination rates by countries and regions lead
to the risk of uneven and fragile recovery of the economy. the world economy, disrupting the global
supply chain, affecting the trade, tourism and transportation industries, increasing unemployment and
underemployment will affect social security. Therefore, Vietnam's economy in the last 6 months of
2021 continues to face many difficulties. The effective implementation of the "dual goals" is a big
challenge, requiring the joint efforts and consensus of the Government, businesses and people, make
the best efforts to realize the socio-economic development goals and tasks in 2021

*Tình hình thị trường chứng khoán VN : growth but have some potential risks
Vietnam is likely to attract more foreign capital into the stock market to catch up with the trend of
upgrading from the frontier market to the emerging market.
According to many experts, Vietnam's stock market in 2021 will still maintain its growth momentum,
but will continue to be affected by multi-dimensional influences from the international and domestic
economic context.

Many positive factors support the market

In 2020, Vietnam's stock market is evaluated as one of the 10 most resilient and resilient markets in
the world during the pandemic, investors close the year in a state of "sublimation" when the value of
their portfolio investment has grown significantly. The total value of capital mobilization through the
stock market in 2020 reached VND 413,700 billion, an increase of 30% compared to the end of 2019.
The capitalization of the stock market reached 84.1% of GDP in 2020, exceeding the set target ( by
2020 to reach 70% of GDP). Total outstanding loans in the entire bond market as of the end of
December 2020 reached about 45% of GDP, an increase of 17.6% compared to the end of 2019, of
which outstanding debt of Government bonds was 27.7% of GDP, outstanding outstanding of bonds
enterprises (CNN) is 15.1% of GDP.
Ta Thanh Binh, Director of the Market Development Department, State Securities Commission
(SSC), assessed that the stock market in 2021 will continue to have many supporting factors, such as:
Vietnam's economy in 2021 will be supported by many factors. assessed as having a higher chance of
recovery than many other countries thanks to the good management and control of the COVID-19
pandemic; Vietnam's participation in bilateral and multilateral trade agreements will help the country's
economy recover quickly; Vietnam is also more likely to benefit from the current shift of supply
chains to countries with low production costs. Besides, the domestic stock market in 2021 will have
many positive changes in quality; Internal factors of listed companies are also relatively good.
“The business results of listed companies according to the financial statements of the fourth quarter of
2020 (unaudited) recorded 82% of enterprises as profitable – the same level as in the fourth quarter of
2019. With Vietnam rising to the No. 1 market share in MSCI's marginal market group after the
Kuwait market was upgraded to the "emerging" group, the Vietnamese stock market is expected to
attract investment from investment funds in Vietnam. marginal market”, said Ms. Ta Thanh Binh.

Mr. Nhu Dinh Hoa, General Director of Bao Viet Securities Joint Stock Company (BVSC), also said
that, with a stable economic and political background, besides, with the expectation of a strong
recovery in growth, businesses Favorable business will add to the belief about the positive trend.

“In the wave of foreign capital flows into emerging markets (EM), Vietnam - an emerging economy is
forecasted to become a bright spot attracting the attention of foreign cash flows in 2021. Besides,
Vietnam is likely to attract more foreign capital flows to the market to catch up with the trend of
upgrading Vietnam's stock market from a marginal market to an emerging market," said Mr. Nhu
Dinh Hoa.

Risks

Besides the positive factors, according to Mr. Nhu Dinh Hoa, the Vietnam stock market in 2021 still
has potential risks that may occur such as hot spots in the confrontation between the US - China
relations, rapid inflation and high inflation. Central banks of major countries raise interest rates earlier
than expected, reduce money injection, if the economy does not recover as expected, it will cause
bank bad debts to increase sharply.

“The challenge for Vietnam's stock market also comes from increasing the market size to be able to
absorb foreign capital flows into the market when Vietnam is upgraded to an emerging market.
Besides, when the economy is more stable, there are many investment opportunities to expand
production and business, the real estate market channel is also showing signs of warming up and
attracting the attention of many investors and sectors. If other areas appear, the cash flow will flow
back from the stock market to other investment channels," said Mr. Nhu Dinh Hoa.

In addition, the process of equitizing State-owned enterprises (SOEs) and divestment of state capital
in equitized enterprises is quite slow. In addition to the strong volatility of the stock market, there is
also concern and fear of legal risks related to the sale of state assets. Thereby, slowing down the
process of putting businesses on the listing floor to create transparency and raise capital for
development.

“The issue of upgrading the market from a marginal market to an emerging market still faces many
legal and policy obstacles that need time to be resolved. Risks spread from inter-market areas (real
estate; foreign exchange; digital currency...) cause virtual fevers in real estate as well as in securities
and information technology systems. For the whole stock market, there are certain obstacles to the
growth of the market", said Mr. Nguyen Son, Chairman of the Board of Directors of the Vietnam
Securities Depository Center.
To be able to actively seize opportunities and growth potential of the stock market and prevent risks,
towards sustainable development, Dr. Can Van Luc, an economic expert, recommends developing the
stock market in depth, increasing its capacity to withstand external shocks; focus on improving
management capacity, supervision, safety and stability of the financial system and stock market;
modernize inspection and supervision tools and forms; enforce strict sanctions for violations on the
stock market.

In addition, Dr. Luc also recommends focusing on popularizing financial knowledge, improving the
professionalism of investors in the stock market (especially personal investment); strengthen the role
of investment agents, professional advisors, open-ended funds, stock and bond ETFs operated by
reputable investment funds to ensure safety and minimize risks in the investment process. initial
investment by individual investors
“In the context of the digital economy and digital finance developing more and more strongly,
Vietnam needs to make stronger strides in institutions, technology, human resources, professionalism,
transparency, resilience. withstand and respond to external shocks. Only then can Vietnam's stock
market grow faster and more sustainably in terms of both size, liquidity and quality, and become an
important channel for capital mobilization and investment in the economy, keeping pace with
financial trends. digital, green finance and green securities of the region and the world”, Dr. Can Van
Luc commented.

Câu 9 : Sử dụng mô hình 5 lực lượng cạnh tranh phân tích 1 ngành cụ thể ( ngành ngân hàng)

Porter's five forces are:

1. Competition in the industry

2. Potential of new entrants into the industry

3. Power of suppliers

4. Power of customers

5. Threat of substitute products

Specific analysis for the banking industry

Barriers to entry

If new banks easily enter the market, the level of competition will increase more and more. The risk
from new banks will depend on the “height” of the barrier to entry. According to the commitments
upon joining WTO, the banking sector will be gradually opened up according to the seven-year
roadmap. The banking industry has undergone fundamental changes as foreign financial institutions
can hold shares of Vietnamese banks and the emergence of 100% foreign owned banks.

There have been 9 banks with 100% foreign capital licensed to establish in Vietnam. However, when
looking at the number of foreign banks with representative offices in Vietnam and foreign banks
having equity capital in domestic commercial banks, the number of 100% foreign-owned banks will
be certain. will increase in the future.

In addition to the regulations on charter capital, the period must be continuously profitable, newly
established banks are also closely monitored by the State Bank. However, that will not prevent
eligible businesses from participating in the banking industry once the Government allows the
establishment of banks again.

Barriers to entry are also reflected in the market segments, the target market that banks are currently
targeting, the brand value as well as the customer base, the customer loyalty that the banks are
targeting. has been built. Once the existing banks have built up a sustainable brand for themselves,
with effective and differentiated financial products and services, plus a large and loyal customer base,
the cost of switching (switching cost) to attract customers of the newly established bank will be
extremely high and therefore they must consider carefully before deciding to enter the market or not.
The reality in the Vietnamese banking industry shows that the conversion costs are generally not high
because banks have not really made a difference in product and service strategies.

Risk of being replaced

For corporate customers, the risk of the bank being replaced is not very high because this customer
needs clarity as well as documents and invoices in the bank's product and service packages. If trouble
occurs in the process of using products and services, these customers often switch to another bank for
the above reasons instead of looking for non-banking services.

For consumers, it is different, the habit of using cash makes Vietnamese consumers often keep cash at
home or if they have an account, they will withdraw money to use again. Government agencies and
businesses pay salaries through bank accounts to promote non-cash payment methods, contributing to
financial transparency for each citizen. However, places that accept card payments are not yet popular

In addition to savings at banks, Vietnamese consumers also have many other options such as holding
foreign currency, investing in securities, forms of insurance, investing in precious metals (gold,
diamonds, etc.). ...) or invest in real estate.

Power of the customer

The survival of the bank is based on the capital mobilized by customers. If the bank can no longer
attract capital flows from customers, the bank will of course be eliminated. Meanwhile, as mentioned
above, the replacement risk of banks in Vietnam, for consumer customers, is quite high. With low
switching costs, customers have almost nothing to lose if they want to move their capital out of the
bank and invest elsewhere.

Power of suppliers

The concept of suppliers in the banking industry is quite diverse. They can be the shareholders that
provide the bank's capital to operate, or the companies responsible for the system or maintenance of
the ATM. Currently, in Vietnam, banks often invest in equipment themselves and choose their own
suppliers depending on conditions. This contributes to reducing the power of equipment suppliers
when they cannot supply a large market but have to compete with other suppliers. However, when it
has spent a large amount of money on system investment, the bank will not want to change suppliers
because it is too expensive, which increases the power of the equipment supplier that has won the bid.

Not mentioning the small shareholders investing through the stock market, but only talking about the
large shareholders who can have a direct impact on the business strategy of a bank. In general, most
Vietnamese banks accept investment from another bank. The power of investors will be greatly
increased if they have enough shares and a merger with the invested bank is possible. On the other
hand, investment banking will have a certain impact on the investment bank.

Trends in the banking industry

Currently, Vietnam has too many banks but not a really strong international bank. In general, banks
have been racing to expand the network size to mobilize a lot of capital (growing in breadth). This
leads to the situation that banks are competing fiercely with each other in credit activities, forgetting
about the attached utility products and services (depth). At the same time, banks expanded their scale,
but due to the lack of qualified human resources, their management could not keep up with the scale
of development.

Competition among existing competitors

It can be seen that the banking industry is still on the rise, the total assets of banks are constantly
increasing, helping banks to enhance their position in the banking sector in particular and the
economy in general. . Total assets of the banking industry are still concentrated mainly in state-owned
commercial banks including BIDV, Vietinbank, Vietcombank, Agribank and a number of large joint-
stock commercial banks such as ACB, Sacombank, Techcombank, Eximbank and MB

In addition, the intensity of competition of banks increases when there is a group of banks with 100%
foreign capital. Foreign banks often have a separate customer segment, most of which are businesses
from their home country. Foreign banks also do not face barriers that many domestic banks are
currently facing, typically securities lending limits, bad debts in real estate lending. They have the
advantage of starting from scratch and have many options while with many domestic banks this is not
possible. In addition, foreign banks also have many advantages such as superior service infrastructure,
professional customer service, and better technology (typically the Internet banking system). More
importantly, it is the ability of foreign banks to connect to a wide network in many countries.

In order to compete with this group of banks, domestic banks have equipped with technology
infrastructure, products and services, personnel as well as transaction network... on a larger scale. A
group of large banks that have been operating for a long time, have a good reputation and have large
capital sources, have soon built up a network of branches and transaction offices, such as Agribank,
BIDV, Vietcombank, Vietinbank and ACB, Sacombank, Eximbank, Techcombank... In contrast, the
remaining group of commercial banks due to many reasons such as low charter capital, new model
transformation, previously only operating in certain areas, network development strategy the network
is not efficient…so the transaction network is still relatively small compared to the above group. In
addition, the advantage of domestic banks is the close relationship with existing customers. Domestic
banks are willing to flexibly lend at preferential rates to their important customers.