After a period of “hot” growth, many stocks on the UPCoM market are showing signs of correction. Notably, in the previous period, the group of stocks with the strongest growth on the UPCoM floor were not large-cap stocks.
In the first 6 months of 2024, the average trading volume on the UPCoM market reached 60.81 million shares/session, the trading value reached VND 984.18 billion/session, an increase of approximately VND 111.3 billion in volume and VND 24.91 billion in value compared to the end of 2023.
There are signs of adjustment.
Particularly in June 2024, the UPCoM market was vibrant with many strong increasing sessions since the beginning of the month, however, the UPCoM Index tended to decrease in the last week of the month, closing at 97.54 points, up 1.73% compared to the end of May 2024.
In fact, in recent times, the trading value on the UPCoM market in many sessions has surpassed the HNX floor thanks to many stocks with strong price increases. However, recently the temperature has begun to show signs of cooling down.
For example, since June 6, 2024, Vinalines' MVN stock has continuously increased from under VND20,000/share to over VND70,000/share on June 21. In the last week of June, this stock had "roller coaster" trading sessions, hitting the ceiling and floor in one session, with a fluctuation of up to 30%, closing the session on June 28 at VND53,000/share.
Similarly, Licogi's LIC shares increased from VND19,000/share on June 17 to VND32,000/share on June 21, and decreased to VND24,500/share on June 28.
During the same period, SJG shares of Song Da Corporation increased from VND 13,400/share to VND 23,300/share, and by June 28, they had decreased to VND 16,500/share; TVN shares of Vietnam Steel Corporation increased from VND 7,000/share to over VND 9,000/share, and then also adjusted down to VND 8,200/share.
Looking at a longer period, shares VGI of Viettel Global, FOX of FPT Telecom, MFS of Mobifone Technical Services, SBD of Sao Bac Dau Technology... also turned down from the peak thanks to the "hot" increase from the beginning of the year.
In general, over the past time, the UPCoM trading market has affirmed its role as a safe and effective stock trading channel for investors and an effective capital mobilization channel for businesses. With the market size and stock quality increasing rapidly, the UPCoM market is increasingly attractive to both domestic and foreign investors.
Commenting on the "wave" of increase of stocks on UPCoM, Mr. Le Xuan Huy, a personal financial investment expert, said that the phenomenon of strong price increase of some stocks on UPCoM in the past period can be divided into 2 main groups.
The first group is made up of industry leaders with good fundamentals, strong financials, and a good growth story for 2024 and beyond. Meanwhile, the second group is made up of penny stocks, which have no fundamentals but have surprisingly positive news.
“For stocks with good fundamentals, investors are expecting a big change from the core business of the company. From there, the company will become better and grow stronger in the future. The stock price has also continuously increased strongly to reflect that expectation,” Mr. Huy commented.
In addition, some investors bought a large amount of stocks on UPCoM with the argument that foreign investors' net selling was too strong on HoSE, making it difficult for stock prices to increase, while UPCoM had new stocks and lower valuations, including businesses in the manufacturing group that paid attractive dividends.
Still high risk
However, according to Mr. Nguyen The Minh, Director of Research and Development of Individual Clients at Yuanta Securities Vietnam, in recent times, the group of stocks with the strongest growth on the UPCoM floor are not large-cap stocks. Therefore, the cash flow is highly speculative and it will be very dangerous if the stocks that are growing "hotly" suddenly turn around.
In fact, investing on the UPCoM floor is riskier than on the HoSE floor from the beginning, because the quality of listed stocks is also lower. Speculation on this floor is much higher because of the wide price gap as well as low liquidity.
For example, CID shares of Infrastructure Construction and Development had a total matched volume of nearly 75,000 shares in 2023, which increased to nearly 274,000 in the first half of this year. However, in recent sessions, only nearly 2,000 shares were traded, or even 100-300 shares. The number of transactions of several hundred to several thousand shares, or even no transactions, is not uncommon for many stocks on the UPCoM floor.
The price fluctuation range on UPCoM is 15%, so for stocks with waves, prices often increase quickly and strongly, helping investors increase their assets quickly. The rising speculative psychology has caused many investors who are not interested in the UPCoM market to risk "trying their luck".
For example, the story of investors making a fortune buying VGI shares has stimulated a large number of investors to chase after Viettel shares, creating a large cash flow clinging to these stocks.
Undeniably, UPCoM has good stocks, but the price fluctuations of many codes show signs of exceeding their real value, especially some enterprises with poor financial indicators and sluggish business such as Licogi, or Vinalines that have not yet recovered their accumulated losses. On the other hand, most stocks have modest liquidity. The low rate of free-floating shares and small sales volume make the buying opportunity not high, so the price can easily increase sharply.
On the other hand, when stocks are adjusted and liquidity decreases, traders are easily “stuck” and face the risk of losses. Two years ago, many codes on UPCoM were briefly pulled up, but after the wave, they returned to the starting line (LIC shares once rose to nearly VND100,000/share, then fell to par value).
In general, the UPCoM floor still has many attractive businesses with their own business stories. Therefore, according to experts, in the current context, investors can consider participating but still need to wait for stock prices to adjust to cheaper valuations, and also need to pay attention and be cautious when the market has many signs of "virtual price increases" in the past period.
Source: VnBusiness
