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Chapter 1 - Overview of Se - MKT

1) The document discusses the formation, development, definitions, classifications, participants, and roles of securities markets. It also covers the efficient market hypothesis. 2) The efficient market hypothesis suggests that securities prices reflect all available public information and that it is impossible to consistently outperform the market through investing based on historical prices or public information alone. 3) The hypothesis has weak, semi-strong, and strong forms with varying degrees to which prices reflect private and public information. Empirical tests have provided mixed support for the different forms of the hypothesis.

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72 views

Chapter 1 - Overview of Se - MKT

1) The document discusses the formation, development, definitions, classifications, participants, and roles of securities markets. It also covers the efficient market hypothesis. 2) The efficient market hypothesis suggests that securities prices reflect all available public information and that it is impossible to consistently outperform the market through investing based on historical prices or public information alone. 3) The hypothesis has weak, semi-strong, and strong forms with varying degrees to which prices reflect private and public information. Empirical tests have provided mixed support for the different forms of the hypothesis.

Uploaded by

Hoàng Anh Nguyễn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
You are on page 1/ 23

NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF BANKING AND FINANCE


----------***----------

CHAPTER 1
OVERVIEW OF SECURITIES MARKET

SECURITIES DEPARTMENT
Contents
1.1 The formation and development of
securities market
1.2 Definition, classification and principles
of securities market operation
1.3 Participants in the securities market
1.4 Roles of securities market
1.5. The efficient market hypothesis

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 2


1.1. The formation and development of securities market

• Governments revolutionize tax system in


order to boost saving and investment
• A wide range of new financial instruments
• Unofficial securities market has been
formed
• Technological innovation : the
dissemination and storage of information
today is broader, cheaper, faster, and
more accurate
• Modernization of government debt market

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 3


1.2.Definition, classification and principles of securities
market operation
• Modern market is characterized by the
securities market
• Securities market is a component of
financial market in which securities can be
bought or sold. These trades are executed
based on predetermined rules.
• Security is a certificate that represents a
claim on the issuer

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 4


Types of securities market

According to
market
organization

OTC: Over The


Exchange
Counter Market

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 5


Types of securities market

According to
capital flow

Primary Secondary
Market Market
BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 6
Types of securities market

According to
different types
of securities

Derivative
Bond Markets Stock Markets
Markets

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 7


1.3. Participants in the securities market
• An issuer is a legal entity that develops, registers
and sells securities to finance its operations. Issuers
may be corporations, investment trusts, or domestic
or foreign governments.
• An investor is someone who buy or sell securities in
the market
– Individual investor
– Corporation investor
• Intermediaries
– Securities company
– Commercial bank

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 8


1.3. Participants in the securities market
• Authority agency and other supporting
organizations
- Government agency (State Securities
Commission)
- Stock exchange
- Securities Investment Board
- Securities depository
- Credit ratings agency

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 9


1.4. Roles of securities market
• For the economy and Government
• For issuers
• For investors

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 10


1.4. Roles of securities market
For issuers
• New capital mobilization channel with
reasonable cost
• Boost the corporation equitization
• Create healthy competition in order to
promote capital efficiency, apply new
technologies and improve products
• Internationalization of securities market
• Seperation between ownership and
management

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 11


1.4. Roles of securities market
For investors
• Analyze and create suitable portfolios
• Investment culture
• Provide investor healthy competition with plenty
of investment opportunities
For the economy and Government
• Capital mobilization
• Tools for implementing monetary policy and
fiscal policy
• Attract foreign direct and indirect investment
• Effective channel to raise capital

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 12


1.4. Roles of securities market

• Asymmetric information
• Speculation
• Insider trading
• Market manipulation
• Conflicts of interest

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 13


1.5. The Efficient Market Hypothesis
• The expectation theory
• The efficient market hypothesis
• Empirical test

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 14


1.5. The Efficient Market Hypothesis

Securities The expectation The Efficient Market


valuation theory Hypothesis

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 15


1.5. The Efficient Market Hypothesis
The expectation theory
• Kỳ vọng hợp lý là kỳ vọng được tính toán
dựa trên mọi thông tin sẵn có trên thị
trường.
• Kỳ vọng được hình thành bằng cách liên
tục cập nhật thông tin hiện có và tái phân
tích thông tin này.

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 16


1.5. Efficient Market Hypothesis
• The efficient markets hypothesis (EMH)
contends that information relevant to the
pricing (valuation) of loans, securities, and
other financial assets is readily available to
all borrowers and lenders at negligible cost
• Patel (1984) points out that once the
dividend announcement is released,
almost all of the stock prices will reflect
that information within 10 minutes

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 17


1.5. Efficient Market Hypothesis

Sub-hypothesis
Weak-form Efficient Market

Semistrong-form Efficient Market

Strong-form Efficient Market

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 18


1.5. Efficient Market Hypothesis
Weak-form Efficient Market Hypothesis
• The weak form of the EMH argues that the
current price of a financial asset already
reflects all its price and trading volume history
• No use of trend analysis
• Historical price is public and available to all
investors
• Assume that historical price can be used to
predict future price, investors can exploit that
information intermediately

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 19


1.5. Efficient Market Hypothesis
Semistrong-form Efficient Market Hypothesis
• The semistrong form contends that the current
price of a financial asset already reflects all
publicly available and relevant information.
• Apply fundamental analysis or technical
analysis brings no abnormal returns

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 20


1.5. Efficient Market Hypothesis
Strong-form Efficient Market Hypothesis
• The strong form argues that the current
price of a financial asset already captures
all relevant public and private information.
• No abnormal returns
• Passive portfolio management strategy

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 21


Empirical results
• Weak-form Efficient Market Hypothesis
testing: Statistical Tests for Independence
and Trading tests
• Semistrong-form Efficient Market Hypothesis
testing: Time series analysis and Event study
• Strong-form Efficient Market Hypothesis
testing: Insiders, Exchange

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 22


Conclusion
• Securities market structure
• Roles of securities market
• Securities market participants
• Efficient Market Hypothesis
• Requirements of securities market
development

BỘ MÔN THỊ TRƯỜNG CHỨNG KHOÁN 23

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