Workers at Garment 10 Joint Stock Company, a member of the Vietnam National Textile and Garment Group (Vinatex). Vinatex is listed on UPCoM under code VGT. — VNA/VNS Photo Trần Việt

HÀ NỘI — The Unlisted Public Company Market (UPCoM) has grown over the last 10 years and become more transparent, attracting increased interest from investors.

UPCoM began operation on June 24, 2009 after the Government and market regulators realised the free-trading stock market had been highly risky for investors.

The launch of UPCoM aimed to tighten the free market and expand the size of the Government-controlled market to gather unlisted companies and make their stocks more transparent, secure and safer for investors.

Since then, many policies have been issued to improve the market's operation.

For example, Decree 60/2015/NĐ-CP eyes better protection of investors’ benefits by requiring public companies to trade shares on UPCoM, while Circular 115/2016/TT-BTC requires State-owned enterprises to both sell State capital and trade their shares on UPCoM.

The improvement of the legal framework has been a boost to the market's performance. In the first six years of operation, there were only 169 companies on UPCoM with average daily trading value of VND15 billion (US$544,300).

In the last four years, the number of UPCoM-traded firms has increased five-fold to 833 and average trading value has increased 18 times to VND250 billion.

Market capitalisation also rocketed to VND945.8 trillion in the same period. Foreign trading rose to VND16.9 trillion in 2018 from VND157 billion six years before.

According to a Stock Exchange of Thailand official, the development of UPCoM was a lesson for many regional markets.

UPCoM helped public companies test their stocks before moving to the main listed markets (the Ho Chi Minh and Hà Nội stock exchanges) and was a place for SOEs to offload State capital in the most efficient way, he said.

However, UPCoM has encountered some incidents that have raised public concern about the market’s transparency and ability to protect investors.

The worst case involved the Central Mining Joint Stock Company, which used to trade shares on UPCoM under code MTM.

The former leaders of the company falsified its trading portfolio and earned dozens of billions of đồng by selling company shares to investors.

That case forced the market regulator to release a list of good-quality stocks and those that were at risk to protect investors.

According to Nguyễn Thành Long, chairman of the management board at the Hà Nội Stock Exchange, UPCoM requirements on companies’ stock trading were not that strict, so about half of UPCoM-traded firms had low levels of transparency.

There were still many small companies recording poor business results and lacking transparency in terms of information disclosure, he told tinnhanhchungkhoan.vn.

The northern market regulator, besides drawing up a warning list on low-quality stocks, has implemented a scoring mechanism to highlight companies with high quality of information disclosure and transparency, he added.

The Hà Nội Stock Exchange plans to ask the State Securities Commission to allow investors and securities companies to do marginal trading on good-quality UPCoM-traded firms to increase the market’s liquidity and prove the market's transparency to investors. — VNS