Although the Unlisted Public Company Market (UPCoM) attracts less attention from investors than the Ho Chi Minh and Hanoi stock exchanges, the market still offers potential opportunities for market players who thoroughly understand it.

Illustrative image (Source: thoibaokinhdoanh.vn)

Booming scale

According to the Hanoi Stock Exchange (HNX), there are now 857 enterprises trading on UPCoM, with a total registered trading volume of over 41.7 billion shares, corresponding to a value of over 410.7 trillion VND (17.6 billion USD).

As of the last trading day of October this year, the market capitalisation of UPCoM stood at more than 961 trillion VND.

At the same time, there were only 367 enterprises trading on the HNX, with total trading volume of more than 13.04 billion VND shares, corresponding to the trading value of nearly 130.4 trillion VND. Market capitalisation stood at more than 186.3 trillion VND.

The number of businesses trading on UPCoM is 2.3 times higher than the HNX and market capitalisation is five times higher.

There are also industry-leading companies trading on UPCoM, such as the Airports Corporation of Vietnam (ACV) with a market capitalisation of nearly 170 trillion VND, the Vietnam Engine And Agricultural Machinery Corporation (VEA) with more than 65.7 trillion VND, and Binh Son Refinery and Petrochemical Joint Stock Company (BSR) with more than 31 trillion VND.

The quality of UPCoM had improved, but the market had not received due attention from investors, except for large enterprises, Phan Dung Khanh, director of the investment consultancy at Maybank Kim Eng Securities, told Vietnam News Agency.

According to the HNX, what concerned investors was the limited transparency of information disclosure for UPCoM stocks.

At present, some UPCoM stocks are trading without matching orders for many consecutive days, which discourages investors from considering UPCoM as a potential market.

Opportunities

Nguyen Van Ngoc, an UPCoM investor, said the market had attracted new companies that could offer a lot of opportunities.

Low liquidity was UPCoM’s weakness, while UPCoM stocks were allowed to fluctuate between /- 15 percent. The figure on HOSE was only /- 7 percent and that on HNX was /- 10 percent, he said.

“When researching a particular stock, investors need to carefully read through company information and annual reports. Good fundamental stocks with strong business results will definitely go up,” Ngoc said.

According to Hoang Thach Lan, head of the individual investor division at Viet Dragon Securities JSC, UPCoM was a mixture of both well-performing and under-performing companies.

Some businesses had been delisted but retained public company status, or those who were not yet qualified to list on the Ho Chi Minh and Hanoi stock exchanges, Lan said.

When choosing an UPCoM stock, investors needed to track its trading process, measure liquidity and look at any abnormalities, if any, such as sudden increases or decreases in liquidity or price.

Currently, enterprises on UPCoM were only required to publish semi-annual and annual financial statements. They should also be asked to publish quarterly financial statements, Lan said.