Source: Securities Times.
Author: Roman.
According to the disclosure of the Hong Kong Stock Exchange, Yee Sight data shows that Berkshire Hathaway, a subsidiary of Buffett, completed the reduction of BYD Company Limited's shares on the 11th of this month. Its shareholding was reduced from 7.02% to 6.9% with an average price of HKD 230.46 per share, which means the cash-out amount is about HKD 310 million.
Hong Kong Chief Executive Carrie Lam announced on the 18th that the Hong Kong Stock Exchange will cease trading in bad weather, with the plan to be implemented in late September.
According to past practices,$HKEX (00388.HK)$The stock market trading, including the northward trading of Shanghai-Hong Kong Stock Connect and the derivative market, will be suspended according to the relevant arrangements in severe weather conditions.
Last year's Hong Kong budget proposal suggested exploring arrangements for the continuation of the Hong Kong stock market in severe weather conditions, and regulatory agencies and the industry have formed a working group to discuss 'typhoon market suspension'.
Historically, the Hong Kong stock market has been closed multiple times due to severe weather conditions. For example, when typhoons Higos, Wipha, and Meranti landed in Hong Kong in 2020, 2019, and 2017, respectively, the Hong Kong Stock Exchange suspended trading for a whole day or half a day.
Why is the Hong Kong stock market so 'willful and delicate'?
According to several brokerage industry insiders in Hong Kong, although Hong Kong is an international financial center, its stock trading system is not as advanced as that of the mainland, and many older investors have to place orders by phone. Once there is a power outage or communication signal problem, it will cause losses to investors and violate market fairness.
In addition, the safety of securities practitioners and investors when traveling to and from the exchange cannot be guaranteed during severe weather conditions, so suspending trading can prevent risks. Looking at the global situation, there have been precedents for the Hong Kong stock market, Taiwan stock market, and U.S. stock market to suspend trading due to abnormal weather, especially typhoons.
What is the impact of a one-day trading suspension on the Hong Kong Stock Exchange's revenue?
According to Hong Kong media statistics from 2018 to the present, 11 trading suspensions have been caused by extreme weather conditions in the Hong Kong stock market, including 4 in 2023. After the Hong Kong stock market closed all day due to Typhoon Sula on September 1 last year, it was closed again on September 8 due to black rainstorm warning and extreme situations, resulting in two days of trading suspension in September alone. Wind Data statistics show that in the first eight months of last year, the average daily turnover of the Hong Kong stock market was HKD 112 billion. If calculated based on this average daily turnover, the two trading days of the Hong Kong stock market suspension in September would result in loss of HKD 224 billion turnover.
At present, the Hong Kong Stock Exchange charges both buyers and sellers a trading fee of 0.00565%, and based on loss of HKD 224 billion turnover, the Hong Kong Stock Exchange would approximate lose HKD 25 million revenue for a two-day trading suspension.
In addition, a trading suspension in the Hong Kong stock market not only affects the stock and warrant transactions, but also affects the futures and options markets. Moreover, with the suspension of Shanghai-Hong Kong Stock Connect, the Hong Kong Stock Exchange cannot collect transaction fees from the Northbound trading, and the impact of a one-day trading suspension cannot be underestimated when considering the stable transaction volume of the futures and options market and the daily trading scale of Northbound trading in an annual basis.
According to the trading fee and trading system usage fee data of the Hong Kong Stock Exchange in the first half of last year, based on a calculation of 120 and 129 trading days for spot and futures markets, a single day trading fee related income for the Hong Kong stock market could reach HKD 21.74 million. A two-day trading suspension would mean loss of HKD 43 million trading fees, which does not take into account the impact on the settlement system fees.
Editor/Somer