HÀ NỘI — The capitalisation of the Unlisted Public Company Market (UPCoM) has rocketed 100 times to reach VNĐ444 trillion (US$19.73 billion) after eight years of operation.

The number of traded companies has also risen from about 40 in 2009 to 568 in 2017, making the scale of UPCoM 2.4 times bigger than the listed market on the Hà Nội Stock Exchange.

The secondary market for unlisted companies also recorded a 50-times increase in its daily trading value, which has reached an average of VNĐ197.7 billion from VNĐ4 billion in 2009.

UPCoM was first launched by the HNX on June 24, 2009 to narrow and limit the trading of companies’ shares on the free, unmanaged market and expand the Government-managed market.

After eight years of operation, UPCoM has undergone significant changes to draw attention from businesses and increase its attractiveness to investors by improving its trading criteria and applying the online trading mechanism.

Those efforts have helped companies, whose shares are traded on UPCoM, become listed companies on the HCM and Hà Nội stock exchanges and raise the transparency of both markets and their businesses.

To celebrate the eighth anniversary of UPCoM, the HNX has issued a new mechanism that divides UPCoM into three categories by companies’ market capitalisation in order to improve trading conditions for the secondary market.

The three levels are the UPCoM Large for 40 companies, which have more than VNĐ1 trillion in their charter capital, UPCoM Medium for 70 companies, which have charter capital of between VNĐ300 billion and VNĐ1 trillion, and UPCoM Small for the remaining 379 companies that have charter capital of between VNĐ10 billion and VNĐ300 billion.

The new firm categorisation also marks new efforts of HNX to improve its monitoring and supervision over UPCoM, which has a variety of companies, capitalisation, quality and sectors.

Other markets on the northern securities exchange like bond and listed markets also posted big improvements in their operation.

In the Government bond (G-bond) market, the HNX has raised approximately VNĐ1.4 quadrillion from G-bond auctions between 2006 and 2016 for the country’s socio-economic development.

Investors have become more interested in long-term bonds in recent years, especially 20- and 30-year bonds. By June 2017, the average maturity of G-bonds reached 13.8 years compared to that of 2016 G-bonds at 8.27 years.

In 2016, the G-bond market recorded its repo (repurchase agreement) trading value was equal to 40 per cent of total trading value in the G-bond market, nearly close to outright trading value.

Repo trading value has also risen in the first half of 2017, occupying 47.9 per cent of the total market’s trading value and nearly balancing the outright trading value.

On the listed market, the number of listed companies has increased to 377 in 2017 from 257 in 2009 with total market capitalisation of VNĐ183 trillion and average market trading liquidity in each session reaching VNĐ500-600 billion.

A lot of large-cap firms have become listed on the northern bourse, such as Asia Commercial Bank (ACB), Hải Phòng Port JSC (PHP), insurance-finance group PVI Holdings (PVI) and PetroVietnam Technical Services (PVS).

In the future, the HNX will apply the market maker mechanism to increase and improve the trading of listed shares.

Market makers will be able to connect investors together, creating opportunities for low-liquidity shares to be attractive to investors.

In the past eight years, listed companies have raised more than VNĐ69 trillion for their business activities in the context that they have difficulties getting access to bank loans due to high lending rates.

Derivatives market ready for action

The HNX has worked with the Viet Nam Securities Depository (VSD) and the State Securities Commission (SSC) to develop the derivatives market in order to provide a new product for investors and improve the quality of the Vietnamese securities market.

To make sure the derivatives market operates properly in its early stage, the HNX will launch the first product, which is the futures contract for the VN30 Index, which contains shares of the 30 largest companies by market capitalisation.

After two years of preparation, the HNX has completed developing the facility and infrastructure for the new market and connected with banks, as settlement units, and brokerages, as market members.

Transforming from the Hà Nội Securities Trading Centre on June 24, 2009, the HNX has risen and affirmed its positive position in Việt Nam’s securities market and received a lot of honourable awards from the Government, the State and the finance ministry. — VNS