HKEx boss moves to ring in the changes
Six months after Charles Li Xiaojia took the helm of the stock exchange from Paul Chow Man-yiu, the new boss is showing he means business by calling for reform of trading hours.
This is a good move. Hong Kong Exchanges and Clearing is the world's largest listed bourse in terms of its own market capitalisation. Yet it has the shortest trading hours - only four hours a day. That is only 1.5 hours more than the Philippine market, which trades for 2.5 hours.
Whether Li will be successful will depend on a public consultation exercise that starts in October.
This is not the first time longer trading hours have been proposed and knocked down by the brokerage community.
The opposition this time is not as strong as when reform was last mooted in 2001. The 2001 proposal was admittedly more aggressive as it wanted to extend trading to 11 hours a day, scrapping the lunch break and adding an evening trading session.
Scrapping lunch? No way, was the reply from many brokers, while the late session was seen as added operating costs. The 2001 proposal, as expected, was shelved.
The new proposal is more realistic in that it only moves the opening time 30 minutes earlier and shortens the lunch break to one hour from two. But brokers who like a long lunch are still concerned as are the restaurants that serve them.
The proposed trading time will be 9.30am to noon, and then 1pm to 4pm, extending trading time to 5.5 hours, more in line with New York, which trades 6.5 hours a day and London's 8.3 hours. The aim is to match opening hours in Shanghai and Shenzhen, a move that may suit companies listed both on the mainland and in Hong Kong.
But some brokers argue that uniform hours will be difficult to achieve. The proposed hours will mean the Hong Kong market opens at the same time in the morning and afternoon as mainland bourses, but Shanghai and Shenzhen close at 3pm while Hong Kong closes at 4pm. Also, Hong Kong has different public holidays - including Christmas and Easter when the mainland markets remain open as usual. The mainland bourses close for a week over the Lunar New Year and the National Day but Hong Kong only closes for the first three days of the Lunar New Year and for one day during the National Day.
There are also regulatory differences. On the mainland, stocks are suspended if they rise or fall by 10 per cent in a day, a system Hong Kong does not have.
Matching the opening hours between Hong Kong and the mainland markets would not address these differences. But Li argues that the HKEx should at least take baby steps to align Hong Kong with the mainland market as more and more firms become dual-listed.
While brokers and restaurant operators may be concerned about the truncated lunch break the need for change is evident.
