Longer hours a benefit to Shanghai bourse
Move to later close would ease trade if proposed London link is to work
The Shanghai Stock Exchange should amend its trading hours to overlap with London trade, an important move if the proposed stock connect between the two cities is to work.
Shanghai’s morning and afternoon sessions cumulatively amount to only four hours of trade a day, less than half that of London and ranking as the shortest opening among major markets.
Although the Shanghai bourse has made no official comment on extending its trading hours, it makes sense to consider the move, especially as it would bring the bourse closer its stated goal to become an international financial hub by 2020.
Extending the afternoon trading session by one hour would allow an overlap with London and bring Shanghai closer in line with international practice.
At present, trade in Shanghai ends for the day at 3.00pm time, which corresponds to the daily 8.00am opening of the London Stock Exchange.
Another option is for London to amend its trading hours, perhaps shifting the start to 7.00am or 6.00am, so as to provide an overlap with Shanghai.
Last week Britain’s Economic Secretary to the Treasury Harriett Baldwin, said the time difference between Britain and China should not be seen as a problem, but rather the reason for having a stock connect scheme between London and Shanghai.
“The stock connect between London Stock Exchange and Shanghai Stock Exchange will strengthen the role of the UK to act as the Western gateway for mainland investors to invest in the Western capital market. It will also allow international investors trading through London to invest in Chinese companies,” Baldwin said.
However, it may make more sense for Shanghai to push back its afternoon close to 4.00pm, matching the afternoon close in Hong Kong.
The China Securities Regulatory Commission said on Friday that since London and the mainland markets have significant difference in trading practices, the London and Shanghai stock connect would not be modelled directly on the Shanghai-Hong Kong Stock Connect.
Shanghai’s four-hour trading day is matched in brevity only by the Shenzhen Stock Exchange. Elsewhere around Asia, the Taiwan Stock Exchange trades for four hours 30 minutes daily, the Tokyo Stock Exchange is open for five hours, while in Hong Kong the trading day lasts five hours and 30 minutes.
These trading hours are significantly shorter than other leading global exchanges. The New York Stock Exchange and the high-technology dominated Nasdaq have daily trade lasting six hours and 30 minutes, while London is open eight hours 30 minutes and Eurex 14 hours.