Hanoi (VNS/VNA) - The Unlisted Public Company Market (UPCoM) hasgained less attention compared to the Ho Chi Minh and Hanoi stock exchanges inthe past few months, but there are some names expected to boost investorconfidence.

There are now 803 companies trading their shares on UPCoM, which is monitoredby the Hanoi Stock Exchange. Eighteen of the total UPCoM companies are valuedat more than 10 trillion VND (439 million USD), accounting for 78 percent ofthe market’s total.

But trading liquidity on UPCoM in the past two and a half months has remainedmodest compared to the two other exchanges.

Trading volume on UPCoM has not exceeded 25 million shares each day sinceOctober 11. In the same period, trading value topped 676.7 billion VND onNovember 27 and the market’s UPCOM Index has moved sideways between 51 pointsand 54 points.

Though there are industry-leading companies trading their shares on UPCoM, whatconcerns investors is the limited transparency of information disclosure andprohibited margin lending for UPCoM stocks. Those elements discouragedinvestors from considering UPCoM a potential market besides the two mainexchanges.

In fact, there have been some scams that justify investors’ concerns. The caseof the Central Mining and Mineral Import Export JSC, with ticket MTM on UPCoM,in 2016 was a warning.

The company started trading its 31 million shares on UPCoM in April 2016 butthe violations had taken place before the preparation of trading portfolio.When the fraud was reported to the police and market regulators two monthslater, MTM shares were immediately suspended.

In that case, former leaders of the company took advantage of loopholes inregard to the market regulation of information disclosure to manipulate thecompany share price and make fraudulent trading.

By doing so, the business leaders deceived shareholders to gain profits fromfraudulent transactions, resulting in a 56 billion VND loss for the wholemarket, including 53 billion VND for shareholders.

The case was brought to court in mid-November but the trial has been adjournedto a later date.

Since the case of MTM, market regulators have strove to improve the tradingquality of the unlisted public market such as putting post-IPO State-ownedenterprises (SOEs) on the market to make it more attractive to investors.

Putting SOEs on the UPCoM is also a way to prepare those companies for listingon the two stock exchanges and meeting higher requirements of investors in thefuture, and to make those firms’ shares more attractive so it would be easierfor the State to withdraw capital from their business.

Among those firms are PetroVietnam Power Corporation (PV Power), Binh Son Refineryand Chemicals Corporation (BSR), the flag carrier Vietnam Airlines,PetroVietnam Oil Corporation (PV Oil).

These are large-cap companies, leading in their own industries with goodcorporate governance, financial strength and monitoring system.

The initial public offering (IPO) of PV Power, PV Oil and BSR in January thisyear helped the State earn more than 16.4 trillion VND from selling parts ofits shares in those companies.

Those SOEs have great growth potential ahead, according to KIS VietnamSecurities and Viet Capital Securities.

For PV Power, KIS Vietnam Securities forecast its 2019 earnings would be muchhigher than 2018 because demand for thermal power would increase while that forhydropower would fall, thus pushing the electricity price in Vietnam.

PV Power is also the second-largest thermal power producer in Vietnam with a9.6 percent market share.

BSR, on the other hand, often receives incentive policies on land lease and taxfrom the Government regarding its important role in the country’s energysecurity.

The company earned 103.9 trillion VND in revenue and 4.9 trillion VND in posttax profit in the first 11 months, beating its full-year forecast by 33 percentand 50 percent, respectively. — VNS/VNA