Market Overview

Shanghai Stock Exchange Will Not Extend Trading Hours


Trading at the Shanghai Stock Exchange will remain from 9:30 to 11:30 am and 1 to 3 pm. The Chinese bourse has little chance of extending its trading hours to match Hong Kong’s, which ends at 4 pm and has just a one-hour lunch break from 12 noon to 1 pm.

The decision was made despite the scheduled through train trading scheme between the two Chinese stock exchanges in October. But the move could hamper attempts by regulators to put in place an effective arbitrage system to address disparities between A and H shares.

On July 25, companies listed in both the mainland and Hong Kong bourses had their A shares traded at a 9.8 percent discount to their H shares. A through train scheme would narrow the price gap between the two share because it will create an arbitrage mechanism that drives A shares in line with the value of H shares.

The scheme will allow Hong Kong investors to purchase up to 300 billion yuan (HK$375 billion) A shares, but mainland investors would have a lower cap of 250 billion yuan. Besides the lower cap, the mainland stock exchange still imposes a daily trading limit of 10 percent and a T+1 system that prohibits investors from purchasing and disposing the same shares in the same day in a bid to prevent market volatility.

The through train scheme is part of the Chinese national government’s move to upgrade the practices in the local stock exchange upon the insistence of the China Securities Regulatory Commission to bring its share market to international benchmark.

In 2010, Beijing planned to implement a through train scheme but shelved it due to reluctance of mainland regulators to implement major changes, observed QianQimin, analyst of ShanyinWanguo Securities.

According to the South China Morning Post, due to the regulators’ obsession with market stability, proposed changes in the trading hours were abandoned.

Zhang Qi, analyst of Haitong Securities, explained, “They want to see the through train’s impact on the market [is] controllable. High volatility is the last thing the officials want to see.”

The two bourses are expected to test the scheme within the next two months.

Other stock exchanges such as the New York Stock Exchange and Nasdaq have off-hours trading scheme that allows trading to take place after the official stock exchanges hours of 9:30 am to 4 pm have officially ended.

Actually, trading outside regular hours is not new. But in the past, it was limited to high net-worth investors and institutional investors such as the mutual funds. However, when the electronic communication networks were introduced, it leveled the playing field by allowing individual investors to engage in off-hours trading.

Learning how to trade off-hours is one of the lessons that new investors could learn if they acquire investor education, which is important if one wants to profit from the stock or financial markets.

There are several providers of investor education such as the stock exchanges, brokerage houses, analysts, economists and online companies.

One such online company is InvestView, (OTCQB: INVU), a Red Bank, New Jersey-based company that has made it a mission to make available to the public products that will help individual investors find, analyze, track and manage their portfolio. The company does it through its online education, analysis and application platform that provides analysis, tools, education solutions and an application.

It delivers subscription-based financial education courses delivered through InvestView’s web site. InvestView also allows new retail investors to use the portal’s subscriber information on a 2-week trial period for $9.95.

InvestView’s web-based tools were designed to simplify stock research and improve the investor’s research efficiency. One such tool is the Market Point, which is made up of five sections, namely: Charts, Stock Watch, Market, Calendar and Campus.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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