Find out with HVA What is UPCOM market?, special trading regulations and ways to participate in the vibrant UPCOM market right below this article.
What is Upcom market?
UPCOM is the abbreviation of “Unlisted Public Company Market”, translated into Vietnamese as “Unlisted Public Company Market”. This is a stock exchange in Vietnam, established to facilitate public companies that are not eligible to be listed on the HOSE or HNX exchanges to trade their stocks.
Characteristics of UPCOM stock market:
- Lower liquidity: Compared to the HOSE and HNX exchanges, liquidity on UPCOM is often lower, meaning that buying and selling stocks can be more difficult and prices can fluctuate more strongly.
- Less public information: Companies listed on UPCOM often provide less information than companies listed on the main exchanges.
- Higher Risk: Due to low liquidity and incomplete information, investing in UPCOM often comes with higher risks.
- Opportunity to find growth stocks: Besides risks, UPCOM also offers the opportunity to find stocks of companies with strong growth potential but not yet known to many investors.
Why invest in UPCOM?
Reasons to invest in UPCOM market:
Looking for high growth opportunities
- Small and medium-sized companies: Many companies listed on UPCOM are small and medium-sized enterprises, which have faster growth rates than large companies.
- Emerging industries: UPCOM is home to many companies operating in emerging industries with great growth potential.
- Undervalued: Many stocks on UPCOM have not been properly valued by the market, creating attractive growth opportunities.
Diversify your portfolio
- Risk reduction: By investing in companies listed on HOSE, HNX and UPCOM, investors can diversify risks and avoid relying too much on one market.
- Increased profitability: A diversified portfolio can provide more stable returns over the long term.
Explore potential companies
- Unknown Companies: UPCOM is home to many companies that have not yet received the attention of institutional investors, creating opportunities for individual investors to find “hidden gems”.
- Early Investment Opportunity: Investing in small and medium sized companies at their early stages can yield very high returns in the future.
Price fluctuation range on UPCOM market
The price fluctuation amplitude on the UPCOM market is often larger than that of major markets such as HOSE and HNX. This is because:
- Low liquidity: Trading volume on UPCOM is often lower, leading to prices being easily affected by large buy and sell orders.
- Smaller number of investors: The UPCOM market attracts fewer institutional investors, so information and cash flow are not widely distributed.
- Specific characteristics of listed companies: Many companies on UPCOM are smaller in scale, in specific industries, and are easily affected by external factors.
Factors affecting price fluctuation amplitude on the UPCOM market include:
- News: Information about companies, industries, and the macro economy can strongly impact stock prices, especially on the UPCOM market.
- Large Buy and Sell Orders: Large buy and sell orders from individual or institutional investors can push prices up or down dramatically.
- Liquidity: When liquidity is low, even a small amount of buy or sell orders can cause large price movements.
- Market sentiment: Investor sentiment also affects the fluctuation range. When the general market goes up, stocks on UPCOM can also increase sharply and vice versa.
Regulations on trading on UPCOM market
UPCOM is a stock exchange for companies not listed on HOSE and HNX. Although it has many similarities with the main exchanges, UPCOM also has its own separate regulations.
Some prominent regulations of the UPCOM market:
Trading rules
- Limit Order: An investor places an order to buy or sell at a fixed price.
- Market order: The investor agrees to buy or sell at the best price available on the market.
- Stop Loss Order: An order that is automatically executed when the stock price reaches a certain level to limit risk.
- Take Profit Order: An order automatically executed when the stock price reaches a certain level to secure a profit.
Margin rules
- Margin may be applied to increase trading capacity, but the level and conditions of application may vary according to the regulations of securities companies.
Margin Trading Regulations
- Similar to margin trading, but with lower risk.
Opportunities and challenges of UPCOM stocks
To evaluate the opportunities and challenges of a company’s stock like “UPCOM”, we need to consider various factors. Some of the opportunities and challenges that an investor may face when considering investing in UPCOM stocks are as follows:
Opportunity
- Growth Potential: If UPCOM operates in an industry with strong growth potential, their stocks can bring high returns to investors.
- Positive Cash Flow: UPCOM has positive cash flow and stable finances, which can be a positive sign for investment.
- Business Strategy: If UPCOM has a clear and effective business strategy, it can create value for shareholders.
- Market Expansion: UPCOM is expanding its business into new markets, which could be an opportunity to increase sales and profits.
Challenge
- Market Risk: The stock market is volatile and may affect UPCOM's share price.
- Fierce competition: If UPCOM is operating in an industry with fierce competition, they may face pressure to reduce prices and reduce profits.
- Policy Changes: Changes in business policies, tax rates, or the legal environment may affect UPCOM's business operations.
- Financial Risk: If UPCOM encounters financial difficulties or debt problems, it may affect the stability of the stock.
What are the notes when analyzing UPCOM market stocks?
- Financial reports: Carefully evaluate financial indicators such as profit, revenue, cash flow, etc.
- Business Plan: Read the company's business plan carefully to assess growth potential.
- Compare with competitors: Evaluate the company's competitive position in the market.
- Macro factors: Consider macro factors such as economic situation, government policies...
- Industry-specific risks: Each industry has its own risks, which need to be carefully assessed.
Some notes when trading on UPCOM
- High Risk: Due to low liquidity and incomplete information, investment risks on UPCOM are often higher than on other exchanges.
- Difficulty in Exiting: When you want to sell, it can be difficult to find a buyer at the desired price, especially with less liquid stocks.
- Research Needed: Investors should spend time researching the company, industry and market thoroughly before deciding to invest.
- Diversify your portfolio: Don't focus too much on one stock, allocate capital to many different stocks to minimize risk.
- Use support tools: You should use technical analysis software and financial websites to support the decision-making process.
- Closely monitor the market: Continuously update information about the market and the company to promptly adjust the investment portfolio.
In short, the UPCOM market is an attractive playground for investors looking for high growth opportunities. However, the risks involved are not small. Successfully exploiting the potential of this market requires investors to both understand the operating mechanism and have a high tolerance for risk. Platform HVA Investment can be a great assistant in your journey to explore the UPCOM market.
