Jane Sheppard reporting: In a major shift from its long-standing approach, Hong Kong has decided to keep its markets open during typhoons and severe weather conditions. This change, set to take effect on September 23, will bring Hong Kong in line with other major financial hubs where markets continue to function despite extreme weather conditions.
The city’s Chief Executive, John Lee, in his weekly press conference, stated that the decision received wide support. He also assured that there will be sufficient time provided during the transition period.
Why the Change?
Hong Kong has been a unique case among major financial hubs with its practice of market closure during severe weather. This approach was increasingly viewed as outdated, especially after the experience of the pandemic years demonstrated that markets could still operate while most workers were home-bound.
On average, Hong Kong experiences around five to eight typhoons each year. However, not all of these storms result in the cessation of daily activities such as traffic and school operations.
Local Government’s Role
The local government played a significant role in advocating for this change. They encouraged coordination between the stock exchange, the securities regulator, and the central bank.
However, the shift was not without opposition. Many smaller brokers expressed concerns about the increased costs and challenges of maintaining operations during extreme weather.
Implications for the Market
Despite the opposition, there is optimism about the effects of this change on the market. Redmond Wong, chief China strategist at Saxo Markets, stated:
– “I believe that it’s a positive development for the Hong Kong market by removing a source of uncertainty about access to market and liquidity.”
The practice of halting trading during severe weather had also been criticized for interrupting the flow through Stock Connect, which links to markets in Shanghai and Shenzhen. In May, an average of 125 billion yuan ($17.2 billion) a day was traded northbound and HK$56 billion ($7.2 billion) southbound on the link.
As Hong Kong moves towards this new approach, it will be interesting to see how the market adapts and how this change might impact other aspects of life in the city.
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In closing, this major shift in policy marks a significant milestone for Hong Kong, a city that has always been known for its resilience and adaptability in the face of challenges.
