The announcement of suspension of the Central Mining and Mineral Import Export Joint Stock Company (MTM) ’s shares by the Hà Nội Stock Exchange (HNX) has shocked investors. — Photo cafef.vn

HÀ NỘI — The announcement of suspension of the Central Mining and Mineral Import Export Joint Stock Company (MTM) ’s shares by the Hà Nội Stock Exchange (HNX) has shocked investors.

HNX said it stopped trading the entire 31 million MTM shares to protect the interests of investors after the approval of the State Securities Commission. MTM was included in the warning list with 38 other stocks that were recently classified by the bourse for a more transparent market.

MTM, which is among the blacklisted firms, recorded good liquidity of millions of shares per day, a very high figure for a stock on Upcom and had entered the market this April. After trading was stopped, each share of MTM was worth VNĐ2,600 (US$0.12) each, 75 per cent lower than its listed value in April. Thus, the value of shares when trading was halted was worth VNĐ80.6 billion.

On June 13, the State Securities Commission (SSC) directed HNX to verify and inspect the operations of MTM. Four days later, HNX found that the MTM headquarters in the city of Vinh, Nghệ An Province was now a restaurant, while its branch in Hà Nội was now a dental care unit.

After tracking the latest data of MTM from the General Department of Tax on June 22, Việt Nam News found that MTM businesses had been shut down and not yet paid more than VNĐ161 million.

However, HNX director Nguyễn Vũ Quang Trung told local media that there was not enough evidence to show that MTM was a fraudulent firm.

"The HNX and SSC are still working with the authorities to verify the case," Trung said, and added that if MTM only changed its addresses without informing the relevant agencies, it would be fined under the regulation.

He said that if MTM was a fraudulent company, the issue would go to the investigating authorities in accordance with legal regulations.

According to HNX, this was the first case since the establishment of the unlisted market of UPCoM 2009. It was set up in the simplest manner in the market for unlisted stocks in Việt Nam to help prevent investors from being cheated and stop them from investing in bad cases. Currently, firms could be listed as long as they were joint stock companies with VNĐ10 billion in charter capital. They were only required to have the audited financial statements and the business registration for the listing.

MTM accountant Dương Thị Vân yesterday told Việt Nam News that her company resumed working yesterday in Vinh City, after a temporary stop.

Vân said the firm finished working with the tax office in Vinh City. She also said MTM’s board was in Hà Nội to clarify the issue with all the relevant agencies.

So far, HNX director Trung still does not know whether MTM is a fraudulent firm or not. Despite what MTM accountant Vân said, the tax website had no updates on the case. One thing remains clear: the confidence of many local investors fell after the incident.

Nguyễn Mạnh Hùng, an investor in Hà Nội said he never bought stocks on the unlisted public company market (Upcom) as he knew that basically trading on the unlisted market was more risky than the listed one.

Some others on the local stock forum said that when such a case occurred there was no mechanism to protect investors.

As a solution to protect the investors in the unlisted market, HNX will divide the stocks in two sets - the Premium and Warning lists as of today.

The Premium set with 86 stocks are those that meet the criteria of the financial report and the standard of information disclosure in the stock market. Under the specific conditions for stocks on the Upcom Premium set, companies with a minimum charter capital of VNĐ120 billion must have made a profit in the previous year and accumulated no losses, while companies with a minimum charter capital of VNĐ30 billion must have a return on equity (ROE) of at least 5 per cent the previous year and no accumulated losses.

These criteria were considered based on the companies’ latest audited financial statements. The warning list with 39 stocks, which failed to receive the mentioned demand, would only be traded on Friday. — VNS