Hong Kong Markets Remain Open During Severe Weather Conditions

Hong Kong used to suspend trading due to typhoons or black rainstorms. Have you ever missed any trading opportunities because of such weather conditions?

Hong Kong plans to implement Severe Weather Trading (SWT) on 23 September 2024, allowing investors to trade as usual and manage market risks during severe weather conditions. In the event of severe weather conditions, such as Typhoon Signal No. 8 or above and/or a Black Rainstorm Warning, the securities and derivatives markets will remain open for trading, clearing and settlement, and listing. Stock Connect, derivatives holiday trading, and after-hours trading will all continue as usual. Trading suspensions due to severe weather will become something of the past in Hong Kong.

Investors strive to seize optimal trading opportunities and respond to market changes in time to manage risks. On regular trading days in the global market, if Hong Kong suspends trading due to severe weather conditions, even for a few hours, the disruption could undermine investors’ ability to manage their portfolios, exposing them to higher risks.

For example, Hong Kong and overseas investors can trade the Shanghai and Shenzhen A-shares and exchange-traded funds (ETFs) through the Stock Connect between Mainland and Hong Kong. In the past, when Hong Kong suspended trading due to severe weather conditions, Stock Connect services were also temporarily halted, preventing investors from trading Shanghai and Shenzhen A-shares and ETFs even though the Shanghai and Shenzhen markets were open. According to HKEX data, trading was suspended in September 2023 due to severe weather conditions, coinciding with the rebalancing of the STAR 50 Index of the Shanghai market. As a result, investors trading through Stock Connect might not be able to manage their positions in light of the market conditions.

Technological advancements have significantly enhanced our ability to cope with severe weather conditions. Remote working arrangements, and online banking and securities services all play a key role in facilitating trading during severe weather conditions.

However, like those in other industries, it is not advisable for employees in the financial services sector to return to the office during severe weather conditions. During these periods, the offices of brokerage firms, banks, and share registrars, as well as the Central Clearing and Settlement System (CCASS) Depository Counter, will be closed. Therefore, it is not possible to place a buy or sell order at a brokerage firm or bank in person, deposit cheques, or withdraw or deposit paper share certificates.

In fact, online investing and electronic fund transfers have become a common practice, and it is easy to familiarise ourselves with these fintech solutions so as to maintain trading during severe weather conditions. For electronic fund transfers, investors should be aware of their transfer limit, and may request a limit increase from their bank in advance if necessary. This will ensure that investors can meet their settlement and clearing obligations timely and avoid charges caused by late settlement. Meanwhile, margin investors can also increase their capability to meet the margin calls and mitigating the risk of forced liquidation.

It is always a good idea to make hay while the sun shines. Investors should consult their intermediaries about the availability of services and arrangements during severe weather conditions, and enquire about any changes to the client agreement. They can also contact their banks for the procedures to increase the electronic transfer limit and adding payees.