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Singapore’s Stock Market Stopped for More Than 2 Hours Yesterday – But Here’s Why It Doesn’t Matter

Yesterday, I had to take a day-off from work as I had a fully-packed afternoon worth of hospital appointments. And as fate would have it, I was at the doctor’s when Singapore’s stock market went dark for more than two hours.

Stock-exchange operator Singapore Exchange Limited (SGX: S68) had declared a formal trading halt at 2:51 pm after power supply issues had caused a trading glitch in its securities and derivatives market. The company only reopened them at 5:15pm and 7pm respectively.

While I was at the hospital, I didn’t even realise such an event had occurred – and I remained ignorant until night-time when I was having a friendly chat with my colleagues. Even after knowing, I shrugged it off without checking my portfolio. To some, this might make me seem like an irresponsible investor. But I assure you, that’s hardly the case.

I was nonchalant about the event because the value of the companies I own parts of – which are determined ultimately by their ability to generate cash flows and profits – does not change depending on whether trades can be made on their shares. As Warren Buffett once said:

“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for ten years.”

When we invest, we need to assess a company’s competitive position; its assets; its liabilities; the popularity of its products and services; and the integrity and capability of its people, amongst other factors. These are what determine the company’s ability to generate cash flow and profits. So if you think about it, how would a trading glitch in the stock market have any effect on those fundamentals of a company?

Unless you’re the operator of the exchanges (which Singapore Exchange is), you’d still be happily taking orders and collecting payments from your customers even while the markets were involuntarily shut yesterday – and that’s what’s important for a company.

To be clear, I’m not saying that it’s okay for trading glitches to occur. To the contrary, I think smooth and orderly capital markets are very important. But, when markets have to be shut down due to glitches or technical faults, it’d be best to have the right perspective so that we can still make rational investing decisions.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing doesn’t own shares in any companies mentioned.