HANOI, Jan 26 (Reuters) - Vietnam’s benchmark stock-market index had its best week in nearly 31 months in spite of a more than two-day shutdown for a “technical issue” that frustrated traders and raised questions about the reliability of the exchange.
On Friday, the VN Index hit its highest since May 2007 and neared the record set in March that year. It climbed more than 1 percent on Thursday and Friday, the first days after the shutdown, and had a weekly gain of 5.04 percent - its biggest since the week ended July 3, 2015.
The technical glitch, which halted trading minutes before Monday’s scheduled closing, illustrated the kinds of risks that investors in new or fast-growing markets can face.
Last year, Vietnam was among the world’s fastest rising markets, with the benchmark leaping nearly 50 percent. Market capitalisation jumped 75 percent in 2017, and is up 14 percent so far this year, to $132 billion, according to exchange data.
For sure, Monday’s abrupt halt to trade - and the market’s closure the next two days - tested patience.
“Clients yelled at me a lot, I had loads of transactions undone,” one Hanoi-based trader said of the trading halt.
The shutdown at the main Ho Chi Minh Stock Exchange (HOSE) was caused by an error in the match-order trading software.
“Such issues should not happen,” said Gil Hecht, CEO of Continuity Software, a New York-based firm which tests computer systems for financial institutions.
“Typically, stock exchanges have a Continuous Availability architecture and systems in place in order to make sure they meet 100 percent uptime,” he said.
The problem was eventually identified as a glitch in the software system for the match-order transactions, which crashed late in Monday’s session and prevented the exchange from retrieving a closing point for the VN Index.
CURRENT SYSTEM DEFENDED
In prepared remarks to reporters on Thursday, Ho Chi Minh Stock Exchange board member Le Hai Tra rejected complaints that the exchange’s system is outdated. “The current trading system is a good system, with a high level of stability,” Tra said. “The system is fully maintained and has been upgraded multiple times to adapt with the growing demand of the market.”
As soon as the market reopened Thursday, both foreign and domestic investors poured money into banking and energy shares as well some other blue chips.
The Hanoi trader who said he was yelled at because of the trading halt said he was “shocked” by how strong inflows were when the exchange reopened.
In 2017, foreigners were net buyers of around $1 billion of Vietnamese shares. This month, overseas players have bought a net $309 million, exchange data showed.
The Southeast Asian nation reported economic growth of 6.81 percent last year, the fastest rate since 2010. (Reporting by Mai Nguyen; Editing by James Pearson and Richard Borsuk)
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