Nguyen Anh Phong

The Unlisted Public Company Market (UPCoM) has been in operation for the past seven years with more than 300 enterprises participating and market capitalisation reaching nearly VND70 trillion (US$3.2 billion).

The strong growth of the market is a challenge for its management authority – Ha Noi Stock Exchange (HNX). The Vietnam News Agency reporter spoke to HNX Deputy Director Nguyen Anh Phong about the challenge.

Could you provide overall information about the current UPCoM market?

After seven years of operation, the market has some remarkable achievements to its name. When the market was first launched, only 10 companies had securities registered for trading with total capital worth VND1.2 trillion ($54.5 million).

As of June 2 this year, the market received 302 enterprises with total capital of VND69.5 trillion. Notably, the market saw an unexpected surge in the trading volume and value in 2015 and in the first five months of the year. From January to May, foreign investors purchased an amount of shares equivalent to 95 per cent of the total volume bought in the whole of 2015.

What are the benefits that the market is offering to enterprises?

The establishment of the market benefits all market participants. First of all, it serves investors. The UPCoM market helps bring more choices of commodities for investment and the security of trading and payment activities on the market is enhanced because activities are supervised and managed by a State agency.

Besides, investors are more easily able to access information of enterprises because they have to comply with State's regulations of information to disclose if they want their shares to be traded on the market.

For public companies with securities registered for trading in the UPCoM system, they have an opportunity to draw capital from another channel and do not have to rely only on bank sources.

Furthermore, the UPCoM also creates conditions for State agencies to narrow down the uncontrolled market and accelerate the equitisation process of State-owned enterprises.

How does the HNX prevent risks for investors when poorly performing companies try to hide their situation?

HNX is taking a series of measures to protect investors. For example, we have issued regulations on the UPCoM market similar to those applied for by companies listed on the official market. Thus, we can absolutely secure the transactions.

HNX has also put the electronic information disclosure system into operation. Thanks to the system, companies can actively provide and update information to investors. So far, 100 per cent of companies on UPCoM have used the system to publicise information.

Currently, the number of companies on the UPCoM market is similar to that on Ho Chi Minh Stock Exchange and equal to three quarters of those on HNX, but the scale and operation quality of UPCoM companies are not equal. Therefore, to help investors with proper assessment of the firms, HNX has categorised the companies into two groups. One group is called UPCoM Premium, which includes companies that have already met standards of listed companies. Investors can make trading decisions based on the categories.

What is your forecast of the UPCoM market development in the future? What will HNX do to foster its growth?

With the current equitisation of State-owned enterprises, UPCom is going to see the participation of more and more companies this year and next year. In the near future, HNX will co-operate with the Ministry of Finance's Department of Corporate Finance to work on amendments to Circular 196 on selling shares of equitised State-owned companies and on using the money collected from the equitisation. Share auctions for equitisation and registration of securities for trading on UPCoM might be re-organised so that time for shares to put into circulation will be shortened.

The circular's amendments will help support the State-owned companies' equitisation process as well as facilitate the development of the UPCoM market.

HNX will continue to take measures to enhance transparency in publicising information, support existing companies on the market and encourage new private firms to register shares for transaction. — VNS