Asia Exchanges Gear Up for Longer Hours, Shortened Lunches
Starting this week, stock traders in Hong Kong will have to say goodbye to two-hour lunches.
The Hong Kong Stock Exchange (HKSE) on Monday shortened its lunch break by half an hour, as part of its push to increase its trading hours. Instead of lunching between 12:30 p.m. to 2 p.m. as traders have done in the past, they will start their meals at 12 p.m. and finish by 1:30 p.m.
Apart from having to speed through lunch, traders will also wake up earlier. The exchange has brought forward the start of its trading day by half hour to 9:30 a.m., to align itself better with the Chinese markets. The closing time remains at 4p.m.; extending the total trading time to five hours from four.
And the exchange isn’t stopping here. By March 2012, the lunch hour will be shortened by a further 30 minutes. There is also talk in the market that the exchange is considering extending the trading hours eventually to 11 o’clock at night, to improve its competitiveness and stamp its position as an international financial center.
“Hong Kong Exchange has to do something to stay competitive and so one thing they can do is extend trading hours, to maybe 24 hours so everybody can trade Hong Kong stocks wherever they are, whenever they want to,” said Francis Lun of Fulbright Securities in Hong Kong.
Directors at the exchange are betting that longer hours will increase its trading volume, which averaged 140.53 billion shares per day in 2010. They say an earlier start will allow traders in Hong Kong to react to market news at the same time as their counterparts in Shanghai and Shenzhen. Mainland-related securities account for more than 70 percent of the trading volume at HKSE, and dominate nearly 50 percent of the exchange’s market capitalization.
The change has been a long time coming. Asia’s second largest equity exchange attempted to shorten its lunch break - which is the longest of the world’s top 20 bourses – seven years ago, but withdrew the plan due to strong opposition from traders.
While traders CNBC spoke to were skeptical if longer trading hours would actually improve turnover, many weren’t too against the change.
“I think most people can get used to it,” said Hong Kong-based trader Mr Hui. “To me, it's pretty much the same as I'll be at work around 8 a.m. anyway.”
Hong Kong’s exchange isn’t alone in its push for longer hours. The Tokyo Stock Exchange is planning to shorten its 90 minutes lunch break by half hour in May. And Singapore is expected to scrap its lunch break altogether in the second quarter.
Aadil Ebrahim, Managing Director at Hong Kong-based Bowen Capital Management, says it’s only a matter of time before more exchanges in Asia follow suit. Currently, regional exchanges with lunch breaks include Hong Kong, Japan, Singapore, Taiwan, Indonesia and Thailand. They also boast some of the shortest trading hours in the world; Chinese bourses take the top spot, at just four hours. Compare that to Europe, where exchanges in France, Britain and Germany trade for up to 8.5 hours.
“At the end of the day, I'm not a fan of these two-hour lunch breaks. Just have a seamless trading day - 9:30 a.m. to 4 p.m. - just like the U.S. does,” said Ebrahim.
“I think that's eventually where the market will head to. And then Japan will follow; Singapore is already following. Even in the Indian market last year, they decided to open an hour early. There was a lot noise. The noise has gone. People will adjust."
- By CNBC's Li Anne Wong