UPCoM shows good performance in liquidity

Although stocks on the unlisted public company market (UPCoM) contain many risks, surprisingly, the number of companies increasing was not less than those of two trading floors HOSE and HNX. Whether the fact that many large-cap stocks still stayed on the UPCoM attracted foreign investors or a wide trading range helped the UPCoM to bring higher profits?

If it requires enterprises to meet several conditions, such as earning profits for several years and disclosing information transparently, to be listed on the trading floors , the UPCoM has more simpler registration procedure and information disclosure obligation. Therefore, investing in the UPCoM contains many risks. The UPCoM constantly sees enterprises which were running at a loss and their accumulated loss was so high that they were being delisted, registering for trading on their own. On the UPCoM’s trading system, the number of stocks which were put into warning status reached 128 by the end of August this year, including 105 stocks being restricted for trading and 11 stocks being halted, accounting for 15 percent of total registered stocks.

There were even some stocks which were traded heavily on the UPCoM then their prices plummeted and they disappeared, raising concerns that stocks were manipulated and cornered. Especially, several stocks suffered accumulated losses exceeding charter capital and announced false information. Particularly, in the past month, there were 12 stocks being halted on the UPCoM for not disclosing information about annual shareholders’ meetings within six months since the end of the fiscal year.

However, surprisingly, since the beginning of this year, liquidity of the UPCoM remained fairly good. While the HOSE had 22 stocks with increases of above 50 percent and the HNX had 31 stocks, the UPCoM had 98 stocks. The rate of increasing stocks generally was fairly high. The HOSE saw 42 percent of total listed stocks advancing, HNX had 35 percent while the UPCoM had 37 percent. In the first eight months of this year, while the HNX-Index fell by 3.17 percent and the VN-Index gained 9.14 percent, the UPCoM-Index surged up to 7.44 percent despite negative developments of international financial market affected foreign cash flow into Vietnam. 

In terms of volume, the UPCoM is the trading floor which brings most opportunities to earn profits for investors with the number of winning stocks touching 300 stocks. Of which, there were up to 98 stocks posting increases of above 50 percent since the beginning of this year, much higher than those of HNX and HOSE. Especially, the UPCoM had up to 45 stocks with profitability of above 100 percent.

It raised a question that why although the UPCoM has the bad and the good altogether and contains many risks with hundreds of stocks being restricted or halted for violating information disclosure obligation or suffering losses exceeding their charter capital, it still attracts lots of investors. The main reason is that many enterprises with large market capitalization and high profitability but they have not wanted to list on the stock trading floor so they hide on the UPCoM. At the present, some hot stocks residing on the UPCoM include Airports Corporation of Vietnam (ACV), Vietnam Engine and Agricultural Machinery Corporation - Joint Stock Company (VEA), Vietnam Pharmaceutical Corporation (DVN) and Vietnam - VRG Rubber Industry Corporation (GVR).

Currently, there are 851 stocks on the UPCoM, of which 844 stocks are allowed for trading. Total trading volume on the UPCoM is higher than the sum of total trading volume of two listed trading floors. Since the beginning of this year, there were more than 60 newly-registered stocks, four times higher than the number of newly-listed stocks on HOSE and HNX. The UPCoM has become more attractive and diverse as regulations of circulars and decrees force public companies to register for trading on the UPCoM within 30 days since the end of the offering, including state-owned enterprises that are equitized.

Therefore, if investors look carefully they will easily discover new stocks. By attracting large and leading enterprises, the UPCoM has become the destination of various cash flows from investing activities. In addition, with the number of registered stocks and trading range superior to those of two listed trading floors, HOSE and HNX, the UPCoM has the attractiveness and create more opportunities for investors to seek for profits.