MTM gives UPCoM a bad name
MTM gives UPCoM a bad name
The announcement of suspension of shares of Central Mining and Mineral Import Export Joint Stock Company (MTM) on June 20 by the Hà Nội Stock Exchange has shocked investors.
The Ha Noi Stock Exchange (HNX) said it stopped trading in the entire 31 million MTM shares to protect the interests of investors after the approval of the State Securities Commission. MTM was included in the warning list with 38 other stocks that were recently classified by the bourse for a more transparent market.
MTM, which is among the blacklisted firms, recorded good liquidity of millions of shares per day, a very high figure for a stock on Upcom, and had entered the market this April. After trading was stopped, each share of MTM was worth VND2,600 each, 75 per cent lower than its listed value in April. Thus, the value of shares when trading in them was halted was worth VND80.6 billion.
On June 13, the State Securities Commission (SSC) directed HNX to verify and inspect the operations of MTM. Four days later, HNX found that the MTM headquarters in the city of Vinh, Nghe An Province was now a restaurant, while its branch in Ha Noi was now a dental care unit.
After tracking the data from the General of Tax Department, Viet Nam News found that MTM businesses had been shut down and none of its registration numbers were connected.
However, HNX director Nguyen Vu Quang Trung told local media that there was not enough evidence to show that MTM was a fraudulent firm.
"The HNX and SSC are still working with the authorities to verify the case," Trung said, and added that if MTM only changed its addresses without intimating the agencies concerned, it would be fined under the regulation.
He said that if MTM was a fraudulent company, the issue would go to the investigating authorities in accordance with legal regulations.
According to HNX, this was the first such case since the establishment of the unlisted market of UPCoM 2009. It was set up in the simplest manner in the unofficial market for unlisted stocks in Viet Nam to help investors from being cheated and stop them from investing in bad cases. Currently, firms could be listed as long as they were joint stock companies with VNĐ10 billion in charter capital. They were only required to have the audited financial statements and the business registration for the listing.
While HNX director Trung still did not know whether MTM was a fraudulent firm or not, the confidence of many local investors fell after the incident.
Nguyen Manh Hung, an investor in Ha Noi said he never bought stocks on the unlisted bourse as he knew that basically trading on the unlisted market was more risky than the listed one.
Some others on the local stock forum said that of the official markets which including HoSE, HNX and Upcom, Upcom was the least transparent. Some investors said that when such a case occurred there was no mechanism to protect investors.
As a solution to protect the investors in the unlisted market, HNX has divided the stocks in two sets - the Premium and Warning lists from tomorrow.
The Premium set with 86 stocks are those that meet the criteria of the financial report and the standard of information disclosure in the stock market. Under the specific conditions for stocks on the Upcom Premium set, companies with a minimum charter capital of VND120 billion must have made a profit in the previous year and accumulated no losses, while companies with a minimum charter capital of VND30 billion must have a return on equity (ROE) of at least 5 per cent the previous year and no accumulated losses.
These criteria were considered based on the companies' latest audited financial statements. The warning list with 39 stocks, which failed to receive the mentioned demand, would only be traded on Friday.
