On May 21, Li Jiachao, Chief Executive of the Hong Kong Special Administrative Region, said in a meeting with the media that the consultation results of the HKEx on its operation in extreme weather would be released in July. He stressed that the government would release the results in July, but it would not be implemented in July.
Li Jiachao pointed out that the actual operation of HKEx involves trading and settlement issues, as well as preparation and actual system cooperation of operating units.
In accordance with past practice, the Hong Kong Stock Exchange will stop trading in the stock market, including the northern trading of the Shanghai Shenzhen Hong Kong Stock Connect and the derivatives market, according to relevant arrangements under bad weather.
Last year, the Hong Kong financial budget proposed to explore arrangements for the continued operation of Hong Kong shares in severe weather. The regulatory authorities and the industry have formed a working group to discuss "the market is always in typhoon".
Historically, Hong Kong shares have been closed for many times due to bad weather. For example, when the typhoon "Haigauss" in 2020, "Weipa" in 2019, and "Miaobao" in 2017 landed in Hong Kong, the Hong Kong Stock Exchange was closed for one day or half a day.
In contrast, why are Hong Kong shares so "headstrong and coquettish"?
The reporter of the Securities Times learned from many securities traders in Hong Kong that although Hong Kong is an international financial center, its stock trading system is not as developed as that of the mainland. In fact, many older investors have to place orders by phone. Once the power is cut off or the communication signal goes wrong, it will cause losses to investors and violate market fairness.
In addition, in bad weather, it is difficult to guarantee the safety of securities practitioners and investors on their way to and from the exchange, so they simply closed the market to prevent risks. Throughout the world, Hong Kong, Taiwan and US stocks have all been closed due to abnormal weather, especially typhoon.
What is the impact of one day's market suspension on the income of HKEx?
A reporter of the Securities Times had previously calculated that the market of Hong Kong shares was closed for two days in September last year after the hurricane "Sura" hit Hong Kong on September 1 and the black rainstorm warning and extreme conditions took effect on September 8. On July 17, affected by Typhoon "Tali", HKEx was also closed for one day.
According to Wind data, the average daily turnover of the Hong Kong stock market in the first eight months of last year was HK $112 billion. If calculated based on this average daily turnover, it means that the Hong Kong stock market lost HK $224 billion in the two trading days after the market was closed in September.
At present, the Hong Kong Stock Exchange charges 0.00565% of the transaction fee from the buyer and the seller. Based on the calculation that Hong Kong shares are less than 224 billion Hong Kong dollars, it is roughly estimated that the Hong Kong Stock Exchange will lose 25 million Hong Kong dollars in revenue when it is closed for two days.
In addition, the suspension of the Hong Kong stock market not only affects the transaction of stocks and round certificates, but also affects the futures and options market. In addition, the suspension of the Shanghai Shenzhen Hong Kong Stock Connect makes it impossible for the Hong Kong Stock Exchange to share the handling fees required by the mainland transactions from the north. With the stable transaction of futures and options within the year and the average daily transaction size of the North Link at 100 billion yuan, the impact of the one-day suspension of the market cannot be underestimated.
According to the data of the trading fees and trading system usage fees of HKEx in the first half of last year, based on the 120 and 129 trading days of the spot and futures markets in the period, the daily trading fee related income of Hong Kong shares can reach HK $21.74 million, and the two days of market suspension means a loss of HK $43 million in trading fees, which has not yet calculated the impact of the clearing system fees.
