Hong Kong Exchanges and Clearing (HKEx) has implemented the second phase of its trading hours changes for securities and derivatives, hoping the modified hours will help boost liquidity on the exchange.
Trading in HKEx’s securities market now runs from 09.30 to 12.00 noon and then from 13.00 to 16.00. The move brings Hong Kong’s hours more in line with mainland China exchanges at Shanghai and Shenzhen. Last March, HKEx had already reduced its original two-hour lunch break to 90 minutes.
The exchange has further increased competition with mainland Chinese exchanges by offering RMB denominated listings and exchange-traded funds (ETFs) of HKEx stocks in Shanghai.
According to Clare Rowsell, head of client relationship management and marketing, Asia Pacific, for agency broker ITG, the latest extension of trading hours is also part of a wider move to improve efficiency over the longer term. However, she did not think the changes would immediately improve liquidity.
“In terms of turnover, there are other factors which may have a more immediate and significant effect on volumes traded in a particular market than simply market hours – for example volatility, investment appetite, or new IPOs,” she told theTRADEnews.com. “That said, there is still a longer-term drive to attract both investment and turnover for Asia Pacific markets and extending or harmonising Asia market hours is one step towards that goal.”
Other Asian exchanges have also been reforming their trading hours in the last 12 months. Singapore Exchange (SGX) introduced all-day continuous trading in August, while Japan’s Tokyo Stock Exchange extended its own opening hours in November.
However, market participants have long questioned the effectiveness of longer hours in attracting liquidity and increasing trading volumes, warning exchanges should instead concentrate on more proactive measures, such as reducing latency and expanding capacity.
SGX has introduced a number of other measures in a bid to improve liquidity, including the August installation of Reach – a new low-latency trading platform – and revisions to minimum bid-ask spreads in July. In February, daily average value of securities traded at SGX rose 4% year-on-year to S$1.8 billion, while derivatives volumes were up 8% to 323,058 contracts.