Turnover dips despite HK stock exchange's longer trading hours

PUBLISHED : Tuesday, 08 March, 2011, 12:00am
UPDATED : Tuesday, 08 March, 2011, 12:00am

The benefits of longer trading hours were not immediately apparent yesterday as the Hong Kong stock exchange's turnover actually edged down on the first day of shorter lunch breaks for brokers.

Yesterday's turnover stood at HK$66.9 billion, down 10.44 per cent from Friday. Brokers attributed it to weak investor sentiment over higher oil prices as a result of the turmoil in the Middle East and North Africa.

The total trading hours have now been extended to five, from four, following an industry consultation. The lunch break has been cut to 11/2 hours from the previous two. Trading now starts at 9.30am and breaks at noon, and then from 1.30pm until 4pm. The stock exchange plans to slash the lunch break by another half an hour next year. From 2012, the two trading sessions will be from 9.30am until noon, and from 1pm to 4pm.

The exchange has, however, yet to convince some of the city's brokers who are opposed to even shorter lunch breaks on the grounds this would slash the time they needed to spend with clients.

Many brokers believe extended trading hours won't have any significant impact on turnover. Some fund managers and brokers said they used the long mid-day break to meet clients and worry that longer trading hours would disrupt such meetings.

Steven Leung Wai-yuen, a director of institutional sales at brokerage UOB Kay Hian, said he and many fellow brokers would oppose one-hour lunch breaks.

'I am fine with the one-and-half-hour break,' said Leung. 'But I don't think one-hour lunch is acceptable.'

The extended trading hours would align the Hong Kong stock exchange closer to the afternoon sessions at the Shanghai and Shenzhen exchanges, where trading resumes at 1pm.

The city's broker community had resisted a proposal of extending trading hours to 11 hours a day in 2001. Their strong opposition caused the exchange to abandon the plan altogether.

Charles Li Xiaojia, who took the baton from Paul Chow Man-yiu as chief executive of the bourse in 2009, has been pushing to reform trading hours. Major markets such as the New York Stock Exchange and Nasdaq trade for 61/2 hours a day. The Irish and Frankfurt exchanges, which trade for 81/2 hours, have the longest opening hours. After the proposed changes to opening hours in Hong Kong in 2012, this exchange will trade for 51/2 hours from the current four hours.

The Hong Kong stock exchange's turnover in recent years has never broken into the top 10, either in terms of value measured in US dollars or the volume of shares changing hands, according to data from the World Federation of Exchanges.

Time tester

Turnover at the exchange dropped 10.44 per cent from Friday

The total trading hours have now been extended from four hours to this number after industry consultation: 5