To trade or to halt? That is the question confounding global markets as stock indexes plunge amid pandemic
- Most stock markets in the world have circuit breakers, as well as limit-up and limit-down controls in place to even out volatility, calm jitters or rein in euphoria
- Closing markets and ceasing transactions, especially if it’s done without proper communication, merely delays the inevitable outcome, brokers say
As governments from Auckland to San Francisco took the unprecedented step of ordering residents to stay home to contain the coronavirus pandemic, financial regulators faced a vexing question: what to do with the stock markets, especially the ones that still employ humans on trading floors?
New York Stock Exchange (NYSE) on Monday closed its iconic trading floor and transferred all transactions to its electronic trading platform after two people working at the world’s largest financial market caught the novel coronavirus SARS-CoV-2, the pathogen that has claimed more than 15,000 lives so far globally. The bourses of Manila and Colombo suspended trading last week in stops and starts, to disastrous ends.
“If you stop investors from cutting their losses, the result would be even more” losses, because panic selling would set in whenever the market reopens, said Geo Securities’s chief executive Francis Lun Sheung-nim in Hong Kong. “You should let the market run its course until common sense takes over.”
