Bank stocks are still one of the attractive investment channels for domestic and foreign investors.
Bank stocks are still one of the attractive investment channels for domestic and foreign investors. However, from the day it was listed on the stock exchange until now, banking stocks have experienced many ups and downs along with the ups and downs of the economy and banking activities. After a period of enthusiastic welcome from investors when they first went on the floor, banking stocks fell into a quiet period and went down. Since the beginning of restructuring until now, commercial banks have gradually come into stable operation, contributing to the recent recovery of banking stocks. However, this recovery is still not really sustainable because the risk factors are still hidden. This makes investors feel confused and awkward when deciding whether to invest in banking stocks or not.
Banking stocks are of great interest to investors in the market. In Vietnam, at present, there are not many studies related to the factors affecting the stock value of the banking industry. Therefore, it is necessary for investors to study the factors affecting the stock value of joint-stock commercial banks.
This study helps investors to have better judgments, judgments and reasonable policies when deciding to invest in banking stocks. The first focus of this study is to identify, consider and evaluate the factors affecting the share price of the banking sector on the Vietnamese stock market during the research period 2010 to 2018. Next is determine the level of impact of macro and micro factors on the stock market value of banks. From there, an empirical model can be proposed to predict the impact of the identified factors on the market value of bank shares on the Vietnamese stock market in the coming time.
Market value of shares
The market value of a stock is the price at which the stock is traded at a given time in the stock market. Depending on the supply-demand relationship, the market price may be higher, lower or equal to its actual value at the time of transaction. The supply-demand relationship of stocks is influenced by many economic, political and social factors, the most important of which is the company's market price and its profitability. In addition, investors' expectations about the performance of business operations, the profitability of a company in the future will be reflected in the market value of shares.
The market price of shares is determined and measured by the share price obtained from the results of trading orders. The market value of shares is affected by many factors both internal and external to the business. The volatility of the market value of shares is the change in the trading price on the stock market of listed companies. Volatility in the market value of a stock is understood as the uncertainty of changes in a stock's price around the average value of the stock itself. A stock is said to be highly volatile when the share price during that period deviates greatly from the average value of the stock itself; conversely, a stock is said to be volatile. volatility is low when a stock's price during that period does not deviate significantly from its average value.
The random walk theory of stock prices
The results of the work of economist Maurice Kendall (1953) on stock prices in the market confirm that stock prices change randomly and unpredictably. In other words, the change in the stock price in the market is a "random walk". According to Kedall, if stock prices are predictable and he uses his method to predict stock prices in the near future, then investors will immediately look for ways to achieve consistent returns. tend to buy stocks when they can predict that the stock price will trend up and conversely sell stocks when they predict it will trend down. If this happens, it can disappear immediately because the prediction of a future uptrend in the security's price will immediately increase the demand for the security at present which in turn leads to the current price of the security rising. ie increase. On the contrary, any judgment about the possibility of a decrease in stock prices in the future will immediately cause the demand for securities to decrease, leading to a decrease in stock prices. Thus, it can be asserted that stock prices will immediately react to any new information that is thought to be implicit in the prediction of the "random walk" model.
The random walk theory of stock prices is based on the efficient market theory. In particular, the efficient market theory states that the stock market is a perfect market, where the stock price will fully reflect the factors affecting it. According to this theory, all information that can be used to predict the trend of stock price movements in the market has already been reflected in the current stock price, until new information appears. In other news that the stock price is undervalued relative to the real value, the demand for securities will immediately increase, manifested by an increase in the purchasing power of investors, and this will cause the stock price to increase. pushed up to the right price. At this price, there will be no excess rate of return, only a rate of return that is sufficient to cover the risk of that security.
Thus, according to this theory, when the stock market is an efficient market, stock prices will be influenced by many factors such as macro factors and micro factors... However, many empirical studies have shown that found that in many countries stock markets are inefficient, so stock prices do not really reflect the reality of the market due to the influence of many other factors on stock prices.
The theory of dividend policy and its effect on stock prices
Dividend is a part of after-tax profit distributed by a joint-stock company to its owners in various forms such as dividends in cash, in shares and in other assets. Based on the business activities of the year and the dividend policy approved by the shareholders' council, the board of directors will propose the dividend payment for the whole year and the expected dividend payment plan of the company in the next following year.
Dividend policy is a policy that determines how a company's profits are distributed. Profits will be retained to reinvest in the company or be paid to shareholders. Retained earnings provide investors with a source of potential future profit growth, while dividends provide investors with a current distribution of profits.
REFERENCES
Adaramola (2011), The Impact of Macroeconomic Indicators on Stock Prices in Nigeria, Developing Country Studies, vol 1.
Almumani, M. A (2014), Determinants of equity share prices of the listed banks in Amman stock exchange: Quantitative approach, International Journal of Business and Social Science, 5(1), 91-104.
Al-Shubiri (2010), Analysis the Determinants of Market Stock Price Movements: An Empirical Study of Jordanian Commercial Banks, International Journal of Business and Management, Vol. 5, No. 10.
Eita and Joel Hinaunye (2012), Modelling macroeconomic determinants of stock market Prices: EvidencefromNamibia, The Journal of Applied Business Research, 28(5), 871-884.
Grossman, Peter Z. (2000), Determinants of Share Price Movements in Emerging Equity Markets: Some Evidence from America''s Past, The Quarterly Review of Economics and Finance 40, no. 3, 355-74.
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