Hong Kong Exchanges & Clearing Ltd., operator of Asia’s third-biggest stock market, is considering extending its trading hours to align with mainland China’s markets, said Chief Executive Officer Charles Li.
The stock exchange is proposing that the city’s trading day begin at 9:30 a.m. with a one-hour break at noon and market close at 4 p.m., Li told reporters in Hong Kong yesterday after the bourse announced a 3 percent increase in first-half profit. The market currently opens at 10 a.m. and has a two-hour break from 12:30 p.m. before closing at 4 p.m.
Changing Hong Kong’s trading hours to be more in line with those of mainland exchanges would be a further step to integrating China’s securities markets and its currency with the rest of the world.
"If we hope for yuan internationalization and eventually for the ‘through train’ to come, we need to have the gate readily open in anticipation,” Li said, referring to a program proposed in 2007 that was to allow Chinese nationals to buy Hong Kong stocks directly. The announcement drove the Hang Seng Index to a record in October that year.
Hong Kong Exchanges has received approval from its board to consult with market participants about the extension in trading hours, Li said.
"They are worried about losing business,” said Jonathan Schiessl, head of Asia-Pacific investments at Jersey, Channel Islands-based Ashburton Ltd., which oversees about $2 billion. “That is the kicker behind this move. Hong Kong is trying to be an off-shore renminbi center so this is basically aligning its interest more in line with the continent.”
Yuan Products
While the Hong Kong bourse aims at boosting trading volume by extending trading hours, its Taiwan counterpart has no plan to follow suit.
"We had considered it before, but it will affect the trading habits of investors and the impact is too big,” Michael Lin, vice-president of Taiwan’s stock exchange, said by phone in Taipei. Taiwan’s trading hours are between 9 a.m. and 1.30 p.m.
The Hong Kong bourse’s net income in the six months ended June 30 advanced to HK$2.26 billion ($291 million) from HK$2.19 billion a year earlier, the company said yesterday. That missed the estimate of HK$2.33 billion by BNP Paribas. First-half listing fees brought in HK$425 million, according to the statement. That’s 30 percent higher than a year earlier.
Price Estimate Cut
The average daily value of shares traded in the city climbed to HK$63.8 billion the six months through June from HK$58.3 billion in the same period last year. Second-quarter average daily value actually fell 12 percent, according to the statement.
Morgan Stanley cut its share-price estimate for the stock to HK$100 from HK$105, and maintained its rating at “underweight,” according to a research report today.
Shares in Hong Kong Exchanges have lost 10 percent this year, more than the 3.7 percent drop by the benchmark Hang Seng Index. The stock slid 3.2 percent to HK$125 as of 10:23 a.m. local time, the sharpest fall on the Hang Seng Index.
The bourse is ready for yuan-denominated products, which will start when China’s policy makers find a way to allow free inflow and outflow for the currency, Li said. The exchange said in its three-year strategic plan that it will offer yuan- denominated products and plans to become a primary channel for investing by Chinese nationals overseas.
International Listings
The bourse boosted its interim dividend to HK$1.89 a share, from HK$1.84, according to yesterday’s statement. It maintained a payout ratio of 90 percent.
"The result is pretty much as expected, given a revenue slowdown in the second quarter,” said Jonas Kan, a Hong Kong- based analyst who rates Hong Kong Exchanges’ shares “outperform” at Daiwa Institute of Research. “There will be more listings coming in, boosting the city’s market capitalization.”
Hong Kong Exchanges has been targeting international listings. United Co. Rusal’s debut in January marked the listing of the city’s first Russian company, followed by L’Occitane International SA in May as the first French company to hold a Hong Kong initial public offering.
The bourse has been seeking listings from countries including Australia, Brazil, Germany, Mongolia, and Japan, it said in yesterday’s statement.
