Euromoney remembers the opening day of the Ho Chi Minh City Stock Exchange, then called the Ho Chi Minh City Securities Trading Center, on July 28, 2000. We were in town for the big moment. There were two stocks and they both hit their trading limits pretty much instantly, whereupon the exchange closed again.
Twenty-one years later the exchange has a market capitalisation of $200 billion, equivalent to about 77% of GDP and hosts 750 companies. Tra Le is the chief executive of the exchange and he is the one who has to deal with the considerable challenge of keeping capacity up to speed with this activity.
Much of the acceleration is extremely recent. “If you look at the numbers, it tells you a lot about how we have been growing recently,” Le tells Euromoney. Average daily trading values were still low and in line with long-term averages right through the first quarter of 2020, at about D4 trillion ($173 million). Covid hit Asia around this time and then a recovery began. “You see the second quarter is five trillion. The third is about six. And then by November and December it outpaced what we imagined about growth in the market.” There are days now when it touches a billion dollars.
On the face of it that was great news: greater local engagement and greater liquidity. The trading volume by value “went up more than five times within a period of one to two years,” says Andy Ho, chief investment officer at VinaCapital. Brokers saw increases up to 13 times their usual volumes.
But it was too much, too soon. In December the trading engine couldn’t cope and there were outages. “We do have buffering capacity, but it’s pretty standard in IT systems: you have capacity for about three times the average, which is safe and efficient, because investment is an expensive thing,” says Le. The problem was that trading grew way beyond even that contingency. “It was way too much of a capacity stretch for our trading engine.”
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