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the hong kong stock exchange officially announced.

on september 16, the hong kong stock exchange announced that it had received regulatory approval to implement inclement weather trading. inclement weather trading will take effect from september 23, 2024. securities trading on or through the exchange (including northbound and southbound trading of the shanghai-hong kong stock connect) will continue to be maintained during inclement weather conditions. similar to regular trading days, all exchange participants need to continue to provide trading-related services during inclement weather.

it is worth mentioning that the hong kong observatory stated on september 6 that because the no. 8 gale or storm signal would last at least until 12 noon that day, the hong kong stock exchange's securities market and derivatives market would suspend trading all day on the 6th, and the shanghai-shenzhen stock connect would also be suspended.

it is understood that last year's hong kong budget proposed exploring arrangements for the hong kong stock market to continue operating during severe weather conditions, and regulatory agencies and the industry have formed a working group to discuss "no closure of the market during typhoons."

on june 18 this year, the chief executive of the hong kong special administrative region, john lee, announced that the hong kong stock exchange would not suspend trading in severe weather conditions, and the arrangement would be implemented in late september.

regarding the arrangement to maintain normal market trading in bad weather that will take effect soon, hong kong exchanges and clearing limited chief executive officer chan yik ting once said, "don't underestimate this move. this measure will allow investors to continue trading without disrupting their risk management plans. this will be a key measure to ensure that we can provide services to investors during trading hours in any weather."

historically, hong kong stocks have been closed many times due to bad weather. for example, when typhoon hagosi in 2020, typhoon wipha in 2019, and typhoon mealpa in 2017 landed in hong kong, the hong kong stock exchange closed for one day or half a day.

securities times reporter learned from several brokerages in hong kong that although hong kong is an international financial center, its stock trading system is not as developed as that in the mainland. in fact, 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, which is against market fairness.

in addition, in bad weather, the safety of securities practitioners and investors traveling to and from the exchange is difficult to guarantee, so the market is closed to prevent risks. looking around the world, hong kong stocks, taiwan stocks, and us stocks have all been closed due to abnormal weather, especially typhoons.

so what impact will a one-day market closure have on hong kong stock exchange’s revenue?

according to statistics from hong kong media, severe weather has caused the hong kong stock market to be suspended 11 times since 2018, including 4 times in 2023. last year, the hong kong stock market was suspended for the whole day on september 1 due to the impact of hurricane saula, and was suspended again on september 8 due to the black rainstorm warning and extreme conditions. the market was suspended for two days 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 hk$112 billion. if calculated based on this average daily turnover, it means that the hong kong stock market lost hk$224 billion in turnover in the two trading days of suspension in september.

the hong kong stock exchange currently charges buyers and sellers an exchange transaction fee of 0.00565%. based on the reduction of hk$224 billion in hong kong stock transactions, it is roughly estimated that the hong kong stock exchange lost hk$25 million in revenue due to the two-day suspension of trading.

in addition, the suspension of hong kong stocks not only affects the trading of stocks and warrants, but also the futures and options markets. in addition, the suspension of the shanghai-hong kong stock connect and the shenzhen-hong kong stock connect means that the hong kong stock exchange is unable to collect the fees required for mainland transactions from northbound transactions. considering that futures and options transactions have been stable throughout the year and the average daily trading volume of the northbound connect is calculated at hundreds of billions, the impact of a one-day suspension cannot be underestimated.

data on the hong kong stock exchange's transaction fees and trading system usage fees in the first half of last year showed that, based on the 120 and 129 trading days in the spot and futures markets during the period, the hong kong stock market's one-day transaction fee-related income could reach hk$21.74 million. a two-day market suspension would mean a loss of hk$43 million in transaction fees, and this has not yet taken into account the impact of settlement system charges.

in the market, on september 16, the hong kong stock market opened low and ended high, and all stocks turned red and rose in the afternoon. as of the close, the hang seng index rose 0.31%, and the hang seng technology index rose 0.51%.

in terms of individual stocks, kuaishou rose by more than 4%, nio rose by nearly 4%, meituan and xpeng motors rose by nearly 3%, and tencent holdings rose by nearly 1%. in addition, zhengqian financial holdings, which had the largest increase in the hong kong stock market, rose by more than 200%.