Margin trading should be allowed on UPCoM
Margin trading should be allowed on the Unlisted Public Company Market (UPCoM) to increase the exchange’s liquidity.
|Workers at Dung Quat Oil Refinery in the central province of Quang Ngai, operated by Binh Son Refining and Petrochemical JSC (BSR). BSR currently trades on the Unlisted Public Company Market (UPCoM) with the code BSR. — Photo bsr.com.vn|
Margin trading allows investors to buy more stock than they would be able to normally.
UPCoM has its own advantages such as a large daily trading band, many good fundamental stocks with stable operations such as Vissan, subsidiaries of Masan Group and Tan Cang Sai Gon Corporation, said Nguyen Hong Khanh, head of market analysis at Vietnam International Securities Joint Stock Company (VIS).
“These stocks, if allowed with margin trading, will attract more cash flow,” Khanh said.
“It is necessary to encourage State-owned enterprises to quickly register for transactions on UPCoM after equitisation, which will make divestment easier and more attractive to investors,” Khanh said.
Liquidity on UPCoM was modest, focusing mainly on banking stocks. The rest have low liquidity, said Truong Hien Phuong, senior director of KIS Vietnam Securities Corporation.
“UPCoM is a capital mobilisation channel that plays an important role in the equitisation and divestment of State-owned enterprises. In order to attract more cash flow into UPCoM, it is necessary to tighten the conditions on listing and improving the standard of information disclosure to gain investors' confidence,” he said.
The Hanoi Stock Exchange (HNX), which operates and manages the UPCoM, has petitioned State management agencies to consider allowing margin trading on UPCoM.
HNX said the move aimed to meet the needs of investors, improve market liquidity and increase the space for securities companies to diversify.
If the proposal is accepted, the HNX said certain shares meeting requirements related to business performance, corporate governance and operational information transparency would be eligible for margin trading on UPCoM.
There are now nearly 900 enterprises trading on UPCoM. In October, there were 813.8 million shares transferred, worth VND11.4 trillion, equal to 6.3 per cent of the total trading value on HOSE and 60.6 per cent of the total trading value on the HNX.
On average, the transaction value on UPCoM reached more than VND518.5 billion per session in October, up 19.59 per cent over the previous month.
Some stocks which meet the conditions for margin trading included the Airports Corporation of Vietnam (ACV), Binh Son Refinery and Petrochemical Joint Stock Company (BSR) and the Vietnam Engine and Agricultural Machinery Corporation (VEA), according to HNX. VNS
Viet Capital Securities (VCSC) of Nguyen Thanh Phuong has been showing signs of decline recently, but the stock market is brightening with strong liquidity.
Commercial banks are facing challenges, including an increase in bad debts because of Covid-19 and pressure that has forced them to increase charter capital. But bank shares remain attractive to investors.