Trading on the Ho Chi Minh City Securities Trading Center was halted for the first time in its six-year existence on Friday after a technical error in data transmitted from the exchange to securities firms.

On Monday, the Vietnam Index ended up 3.98 percent at a 723.84 points after reaching 724.29 points earlier in the day.

A number of new companies are expected to make their debuts by year-end, including top information technology services firm, FPT, which will list on Wednesday.

The exchange, which opened in July 2000, has risen 135.4 percent this year, making it one of the world's fastest growing markets in 2006.

It trades in shares of 64 companies, including two small firms that listed on Monday. The market capitalization stood at $5.7 billion.

Hanoi-based Cavico Vietnam Mining and Construction Co, half owned by Cavico Corp, Vietnam's first overseas-listed firm, made its share debut on Monday, closing at VND42,000 each ($2.6).

Doan Xa Port Co is another debutant, closing at VND38,000 ($2.36) each, valuing the firm at $8.3 million.

A broker in Hanoi said the trading system worked as normal on Monday and investors kept their positive sentiment in a rising market, which helped boost the index on Friday to 696.12 points.

But the Web site of the stock market (www.vse.org.vn) remained inaccessible on Monday.

In Hanoi, the smaller over-the-counter market also grew after the share listing of five more companies, bringing the number of firms listed there to 28 with a market capitalization of $2.6 billion.

The OTC market's index closed up 2.17 percent at 229.72 points on Monday.

“Stable growth trend”

In a bid to boost Vietnam's capital market, the government has been offering 50 percent corporate income tax relief to companies that make their market debuts by the end of 2006.

A race to meet the deadline has produced a rash of IPOs in recent months.

Between Dec. 12 and Dec. 29, 19 more companies are scheduled to make their debuts in Ho Chi Minh City and 17 more have permission to list there but have not announced dates.

A Dow Jones Newswire report also quoted Vu Bang, chairman of the State Securities Commission, or SSC, as saying that Vietnam planned to have “(a combined) 170 companies listed their shares on both bourses in Ho Chi Minh City and Hanoi."

The combined market capitalization of the two markets is forecast to account for 13 percent of Vietnam's gross domestic product by the end of 2006, up from 4 percent a year earlier, Bang also noted.

Bang said Vietnam's fast-growing stock markets were becoming increasingly attractive to foreign investors, because "liquidity is improving and regulations have been strengthened."

Vietnam's Securities Law, to be enacted from 2007, would boost transparency because it would require all shareholding companies to be audited, a landmark change from now, he added.

"I believe in a stable growth trend for our market as Vietnam continues to integrate with the world economy in coming years," he said.

But he also shared views with traders from state-owned securities companies in Hanoi that the addition of a great number of new companies to both bourses in coming weeks also raised the concern of price dilutions.

"There are factors causing concern as companies rush to issue shares by the end of the year...putting pressure on current prices," Bang added.

According to Pham Kinh Luan, an analyst with a Hanoi-based securities firm, the phenomenal growth of Vietnam's stock market also contained risks because "players have inflated share prices to significantly high levels."

Following Friday's glitch, several investors and brokers also said they were concerned about overloads in the trading system due to the rising number of new shares, but stock market officials said the system was capable of handling up to 3,000 companies.

Source: Reuters, Dow Jones Newswire