VZCZCXRO5771
OO RUEHDT RUEHPB
DE RUEHHM #0519/01 1501042
ZNR UUUUU ZZH
O P 291042Z MAY 08
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4515
INFO RUEHHI/AMEMBASSY HANOI PRIORITY 3078
RUCPDOC/USDOC WASHDC PRIORITY 0072
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RUEHHM/AMCONSUL HO CHI MINH CITY 4739

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000519 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS AND EEB/IFD/OMA 
USAID/ANE/EAA FOR DONOVAN 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
SINGAPORE FOR TREASURY 
TREASURY FOR SCHUN 
STATE PASS USTR FOR BISBEE 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV SOCI VM
SUBJECT: TECHNICAL PROBLEMS CLOSE HCMC STOCK EXCHANGE 
 
 
HO CHI MIN 00000519  001.2 OF 002 
 
 
¶1.  (SBU) Ho Chi Minh City Stock Exchange's (HoSE) trading 
system software failed on May 27, bringing weeks of falling 
prices to a temporary halt.  This isn't the first time the 
platform has experienced problems, but the three previous 
interruptions lasted just hours each.  With the market trending 
down and inflation on the rise, a few conspiracy theorists frame 
this as an intentional break.  Most HCMC financial sector 
professionals, however, believe the episode is nothing more than 
a timely reminder that Vietnam's financial markets still need a 
lot of work before they can be considered reliable and 
efficient.  After close of business on May 29, the HoSE 
announced the problem had been solved and trading will resume on 
May 30.  A major system upgrade has been scheduled for June for 
some time.  End summary. 
 
Down for the Count 
------------------ 
¶2. (SBU) The State Securities Commission (SSC) Market 
Development Department Director General Mr. Nguyen Son told 
Hanoi EconOff that HoSE trading was suspended on May 27 for 
technical reasons, when technical experts from HP and 
Internet.Com checked and found out that there were errors in the 
operating system software.  According to a senior finance 
reporter who spoke with ConGen EconOff, HOSE was also conducting 
technical trials that would enable securities companies to enter 
remote orders from their company offices when the system failed 
early on May 27.  The reporter added that Thailand Stock 
Exchange (TSE) experts were in town to provide technical support 
to HoSE when the system went down, and have diagnosed the 
software as the source of the problem.  Media reports note that 
technical glitches previously halted trading for several hours 
in December 2006, and February and August 2007, prompting HoSE 
to begin looking for a new, more reliable software system that 
it intends to install by June 2008. 
 
¶3. (SBU) HoSE's International Cooperation Office explained that 
HoSE is modeled on the Thai Stock Exchange.  HoSE receives 
regular technical assistance and sub-licensed its current 
software from TSE, which licenses the software from the Chicago 
Stock Exchange.  HoSE purchased trading system hardware from a 
Thai company called Internet.Com. 
 
Most Say Just A Case of Growing Pains 
------------------------------------- 
¶4. (SBU) On balance, the HCMC financial professionals we spoke 
with were annoyed at the interruption, but consider technical 
problems a risk of doing business in many countries, not just 
Vietnam.  Dragon Capital Director Dominic Scriven took the 
exchange to task in the press, saying investors expect a stock 
market to be stable and free of technical problems.  One 
Vietnamese securities firm director told EconOff that HoSE sends 
a terrible message when it does not employ a back-up system; 
this is causing HCMC investors to worry about the quality and 
technology of the trading system.  One trader saw the silver 
lining in this cloud, noting that "at least the index didn't go 
down again today." 
 
But Conspiracy Theories Abound 
------------------------------ 
¶5. (SBU) Many domestic investors need to sell, another 
Vietnamese securities company told us, and every day without 
trading hurts them.  One local brokerage issued a report on May 
28 in which they state that the quantity of unfilled sale orders 
is placing the bourse out of equilibrium.  Some traders believe 
that HoSE made up an excuse to suspend trading given the 
non-stop fall of the Vietnam index.  Broader inquiries around 
HCMC repeatedly tapped a deep vein of skepticism that asserts 
"the government" is deliberately stalling, just waiting while 
crucial political decisions are under consideration in Hanoi. 
 
Comment 
------- 
¶6. (SBU) This episode serves to remind that Vietnam's financial 
markets are still developing and have a long way to go.  With 
persistently high inflation and growing concern over Vietnam's 
current account deficit and foreign exchange regime, investors 
already on edge will worry about this latest bit of news.  Any 
trading interruption, no matter the cause, makes players 
increasingly nervous in business that lives on accurate and 
timely information.  End comment. 
 
7.(U) This cable was coordinated with Embassy Hanoi and the 
 
HO CHI MIN 00000519  002.2 OF 002 
 
 
regional financial attache. 
FAIRFAX