As a much-anticipated Shenzhen-Hong Kong Stock Connect trade couple starts contrast this week, to rigging for an central launch subsequent month, officials competence be correct to demeanour closely not usually that a systems work seemlessly, though during a holiday schedule.
This year alone, a batch bond between Hong Kong and Shanghai has had to postpone trade for a sum 27 days out of a year’s sum 261 accessible operative days. That’s some-more than a tenth of all days.
So many of those days were simply since possibly a mainland or Hong Kong were carrying a open holiday, definition cross-border trade had to be dangling for both sides
Hong Kong has 17 annual open holidays in a year, among a tip worldwide. Mainland China took a whole week off during Lunar New Year and National Day in October, 17 days off in total.
To make things worse, holiday times in Hong Kong and mainland are not synchronised. Hong Kong batch marketplace closes for Easter and Christmas while a China marketplace stays open during both.
But clearly, since of a inlet of how it works, if one is closed, a other can’t trade, brining possibly north or south trade to a standstill.
Brokers design a new Shenzhen-Hong Kong couple to counterpart a same holiday manners as Shanghai-Hong Kong, though some are endangered those sealed days could deter some traders from embracing a complement as firmly as hoped, on tip of dual other categorical issues already aired: that a series of bonds avaiable for duel trade is limited, and a miss of liquidity.
The launch of a Shenzhen-Hong Kong link, now pencilled in for Nov 21, will make 880 Shenzhen-listed bonds accessible to general investors, and 568 Shanghai listed stocks, a substantial widening of choice.
For mainland investors, a series of bonds around a new trade couple will also dilate to 418 Hong Kong stocks, extremely some-more than a 312 Hong Kong bonds accessible by a Shanghai link.
Last month mainlanders on normal traded HK$7.96 billion value of Hong Kong bonds daily, around 10 per cent of sum Hong Kong turnover, and scarcely 5 times some-more than a year progressing (HK$1.69 billion).
But only consider how volumes could be improved, if for instance, trade was still authorised to happen, even when one side is enjoying a inhabitant holiday. Losing 10 per cent of your trade volume, only to concede for a few days off certainly seems excessive, generally as a whole Stock Connect judgment is still in a early days, is nonetheless to be entirely upheld by traders in possibly market, let along those overseas.