Malaysia's Stocks Fail to Trade on System Glitches

July 3: Malaysia's Kuala Lumpurstock exchange suspended trading on its equities market today after failing to fix its worst systems failure, causing an outcry among investors.

A ``multi hardware failure'' in the exchange's core trading computer system forced the all-day suspension, operator Bursa Malaysia Bhd said. Efforts to resume trade using a back-up system after the midday break didn't succeed.

``We have a bear market, and this happens,'' said Jason Lee, who helps oversee the equivalent of $2.1 billion as general manager of equities at Amanah Raya-JMF Asset Management in Kuala Lumpur. ``I've never experienced a one-day suspension, not during my time.''

Malaysia's benchmark Composite Index yesterday slumped for a fifth day to its lowest in 15 months on concern political turmoil and accelerating inflation will curb economic growth. About 10,000 people rallied in a Kuala Lumpur suburb on July 1 to support Malaysian opposition leader Anwar Ibrahim, who is facing a new sodomy allegation. He has denied the claims and has accused the government of a conspiracy.

Today, the MSCI Asia-Pacific Index, the region's benchmark index, lost 1.4 percent at 7:39 p.m. in Tokyo.

Bursa's Chief Executive Officer Yusli Mohamed Yusoff also denied that the government sought to halt trading to stem the market slump.

`Happy to Deny'

``I've just gone through with you what happened today and I don't think there was anything in there to show that there was any phone call coming from upstairs,'' he said. ``I will be very happy to deny that.''

Prime Minister Abdullah Ahmad Badawi told reporters in Kuala Lumpur today the trading suspension isn't related to the current political situation.

Trading is expected to resume July 4, he told reporters in Kuala Lumpur today.

A new trading system to replace the older one is expected to be introduced in a ``couple of months,'' he said.

Bursa has been working with Atos Euronext Market Solutions Ltd., a unit of New York-based NYSE Euronext, on the new platform, since 2003. Currently, Bursa uses Hewlett-Packard Co.'s trading hardware, said Yew Kim Keong, chief information officer of Bursa.

The previous major systems breakdown was in June 2000, when it managed to rectify the problem before the end of the trading session, Yew said.

In March, a computer glitch delayed the opening of Malaysia's futures and derivatives trading by more than an hour.

``What a day,'' Lee said. ``It's quite scary in the sense that this sort of thing can happen for a fairly developed market.''

In August last year, Bursa Malaysia had to revise the Kuala Lumpur Composite Index after adjustments to one of its constituents caused an error in the index calculation. Bursa said trades entered in the morning session today will be canceled.

Bursa shares will be ``under a lot of pressure tomorrow,'' Lee said. ``It doesn't bode well'' for the stock, he added.

Bloomberg