HA NOI (Biz Hub) — The classification of stocks on the Unlisted Public Company Market (UPCoM) will have a positive impact on the stock market, according to experts and analysts.

Under the new classification set by the Ha Noi Stock Exchange (HNX), ‘UPCoM Premium' will include the stocks of firms with good financial health and transparency, while the ‘UPCoM Warning' classification will hold the remaining stocks. Stocks classed as UPCoM Premium will be allowed to indulge in margin trading if they meet the conditions for such trading, as set by the State Securities Commission (SSC).

Bui Nguyen Khoa, BIDV Securities Corporation's head of Macro Economics and Markets Division, said the HNX has created mechanisms to pave the way for a considerable boost in this market.

The margin trading allowed for enhanced liquidity in capital markets and improved the convenience of borrowing capital for the short term, as well as enabling traders and investors to make better use of trading opportunities, and increasing the size of trade and eventually increasing the turnover on the exchanges, he said.

Last year and in the first months of this year, UPCoM has seen more trades and liquidity in quality stock, but not margin trading, even while the demand for margin trading by investors is quite high, Khoa added.

Besides, the loosening of the fluctuation band price from 10 per cent to 15 per cent has helped investors feel more excited to enter the market, and thus liquidity has significantly improved.

"The Premium shares will enjoy many advantages of money flow, price fluctuation and especially liquidity, while investors will be cautioned by the risks of stocks in the ‘Warning' classification", said Nguyen Xuan Binh, deputy head of Bao Viet Securities Corporation's Market Analysis.

Binh added that the UPCoM can divide stocks into two categories. The first group are fluctuating stocks, that includes stocks with sudden information changes, sharply fluctuating prices and newly listed shares for IPOs, which attract investors and speculative money. The second group are basic stable stocks, which have real money flow value from investors or investors with long-term investment strategies.

The UPCoM Premium set, that came into effect from April 26, will include businesses whose shares meet the criteria of financial situation and consciously adhere to disclosure provisions.

Additionally, the criteria for classification of stock as UPCoM Premium includes registered securities trading, which will allow margin trading if they meet the defined conditions in the regulations guide for margin trading of securities by the SSC.

Many market participants evaluate the classification on UPCoM, and this will help investors easily identify investment opportunities and focus on finding quality stocks through the UPCoM Premium set, Binh said.

So far, 300 companies have stock listed on the UPCoM. Many of them are large enterprises with charter capital worth over a trillion dong. — VNS