Hong Kong stock traders may no longer get their “typhoon holidays” as the city’s bourse explores arrangements to continue trading under severe weather.
(Bloomberg) — Hong Kong stock traders may no longer get their “typhoon holidays” as the city’s bourse explores arrangements to continue trading under severe weather.
Hong Kong Exchanges & Clearing Ltd. will study a series of proposals on the optimization of its trading mechanism, including “arrangements for maintaining operation for the market under inclement weathers,” the city’s Financial Secretary Paul Chan announced in his budget speech Wednesday. The exchange operator will also put forward specific reform recommendations on Hong Kong’s GEM board this year, he added.
Trading halts due to severe weather are seen as increasingly antiquated given that the global finance industry has adjusted to remote working amid the pandemic. They are also likely to be increasingly inconvenient, as extreme weather events linked to climate change grow more common.
Rival hub Singapore has never halted trading at its stock exchange due to weather-related events.
HKEX shares pared an earlier drop of as much as 2.8% after the announcement to close down 0.6%, amid weakness in the broader market. The Hang Seng Index declined 0.5%.
“It’s understandable that the stock exchange is considering such new rules as the pandemic and work from home really changed people’s working habits,” said Dickie Wong, executive director of research at Kingston Securities Ltd.
Currently, trading in shares and other securities could be halted under extreme weather, such as a typhoon. Hong Kong is typically hit by about six typhoons annually, usually from June to October, although only a fraction of those result in market or school closures.
Last November, HKEX canceled afternoon trading on a day when the city hosted a high-profile summit for bankers as tropical storm Nalgae drew close. Before that, it delayed the open of its $5 trillion stock market in August because of tropical storm Ma-on.
With most orders now received and executed electronically, industry watchers said the infrastructure is in place to ensure continuous trading in bad weather. After all, the pandemic has also shown that staff in the finance industry are able to operate remotely.
“Many exchanges don’t have weather trading halts or even lunch break hours like we do in Hong Kong,” said Wong. “They just want to use every single minute to trade.”
–With assistance from Ishika Mookerjee and Jeanny Yu.
(Updates with chart and more context)
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