Hong Kong will trade on October 2, 5, 6 and 7 without Stock Connect flows in either direction, which may leave China-focused and dual-listed shares on thinner, more offshore-driven liquidity. With the onshore yuan market shut, offshore yuan carries price discovery with less depth, and mainland commodity and financial futures are closed, so traders lose Chinese price signals for a week. Any news during the break will be priced offshore first, which raises the chance of adjustments when the mainland reopens on October 8. The scale of the People's Bank of China's liquidity operations around the holiday is also a factor for funding conditions.
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Mainland China's markets and Stock Connect go dark for a week while Hong Kong reopens on Friday, leaving Hong Kong equities and the offshore yuan to carry price discovery until October 8.
Summary:
Mainland China's financial markets are closed from Thursday, October 1 to Wednesday, October 7 for the National Day holiday, and are due to reopen on Thursday, October 8. The Shanghai and Shenzhen stock exchanges are shut for the full seven days. The Shanghai Composite ended Wednesday's session up circa 0.3% at around 3,840, on turnover of around 680 billion yuan, in the final session before the break.
Stock Connect, the program that links the mainland and Hong Kong stock markets, is suspended in both directions for the whole week. HKEX's Stock Connect calendar shows both Northbound and Southbound trading closed from October 1 to 7, with normal operation resuming on October 8. The link requires both markets to be open at the same time, so it stops whenever the mainland is on holiday even if Hong Kong is trading. A notice from the China Securities Depository and Clearing arm on September 17 set out the same dates for the Shenzhen link.
The Hong Kong exchange itself is closed only on Thursday, October 1 for National Day. It reopens on Friday, October 2 at its usual hours, 09:30 to 12:00 and 13:00 to 16:00 local time, and trades normally on October 5, 6 and 7. Trading in Hong Kong may thin out around the holiday.
Futures and gold markets in Shanghai also stop for the week. The Shanghai Futures Exchange, the China Financial Futures Exchange and the Shanghai Gold Exchange have each said their markets are closed from October 1 to 7 and will reopen on October 8. All three will also stay shut on Saturday, October 10, which is a make-up working day for offices, since exchanges do not trade on weekends. The Shanghai Futures Exchange will hold a call auction from 08:55 to 09:00 local time on October 8 and resume night trading that evening. It adjusted price limits and margin ratios ahead of the break and will restore them after the first day of trading, according to Shanghai Metals Market.
The closures leave the offshore yuan market to carry price discovery, with less depth than the onshore market, as I noted in my earlier preview of the break. Mainland China was also closed on September 25 for Mid-Autumn Festival, so the week-long closure follows a separate one-day break the previous week. Traders will watch how Hong Kong-listed and China-focused shares behave without mainland participation, how the offshore yuan trades, and whether news during the holiday leads to adjustments when mainland markets reopen on October 8.
This article was written by Eamonn Sheridan at investinglive.com.
Source: Investing Live - News
