Bourse has to weather days like this

Editorial | Mary Ma 14 Oct 2020

The No 8 signal triggered by tropical storm Nangka failed to stop a better part of financial activities yesterday, with China Evergrande kicking off its HK$8.4 billion share placement and mainland generic drugmaker Simcere Pharmaceutical going ahead with its initial public offer launch.

But the stock exchange was closed despite winds that left few blown away by the power of the storm.

The contrast should have been enough to raise eyebrows but, unless rules are updated, Hong Kong Exchanges and Clearing officials will readily refer to these rules for convenience.

For example, the rules say the market may open after 2pm if the No 8 signal is lowered between 11:30am and noon. Otherwise, it will close for the whole day.

The problem is that these rules on when to reopen the market and when to close it are obsolete in this digital age. They should and have to be reviewed.

In hindsight, the exchange could have reacted to the "storm" differently to take advantage of the convenience made possible by digital technology. Many in the white-collar sector must have become more adept than before at working from home as a result of pandemic-mandated restrictions.

And that is the silver lining in this devastating pandemic.

China Evergrande and Simcere went ahead as planned because one can subscribe to their offers on the computer, whether one is at home or in the office.

In this light, one fails to see why the exchange can't stay open in all weather conditions. The days when the trading floor was all movement are long gone, isn't it? Trading is now done on computers, and this holds for fund managers and retail investors.

That the exchange still finds itself compelled to close the market due to the conditions beggars belief, given that it is a bad example of conducting business in the modern age.

Yesterday, Hong Kong-based Chinese Gold and Silver Exchange managed to keep up trading activities in London gold despite the Nangka shutdown.

Should the bourse follow suit? It should at least start a review to make the SAR's premier marketplace weather proof.

It's also curious how calm the public reaction to the typhoon warning was. Perhaps people have learned from the many uncertainties brought on by the pandemic so that they are now more prepared for the unexpected than ever before.

The No 8 signal was a little unexpected even though meteorologists could see it coming a proverbial mile away.

First, Nangka was still 440 kilometers at its nearest point to Hong Kong.

Second, it was the first time since the 1960s that a No 8 signal was issued over a typhoon when it was that far away.

The Observatory surely had its own reasons for issuing a No 8 signal that, in hindsight, was sparked by an excess of caution.

They probably did not want to take chances, knowing people these days are less adventurous and unwilling to take risks after having lived in the comfort zone for long. In opting to play it safe, they erred on the side of caution, but erred big they did.

Search Archive

Advanced Search
July 2021

Today's Standard