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HK to soften suspension rule

(Shanghai Daily)
Updated: 2007-02-09 11:13

Hong Kong Exchanges & Clearing Ltd may let companies resume trading the same day their shares are suspended instead of after they publish newspaper announcements, the operator of Asia's second-biggest stock market said.

The exchange is studying the possibility and may make an announcement this month, Richard Williams, head of the exchange's listing division, told reporters yesterday. Any changes are "more likely" to be implemented in June, he said.

"It's probably better for the market," said Tathagata Guha Roy, who helps manage US$1 billion for Alliance Trust PLC in Hong Kong. "It would open up liquidity and enable investors to react faster to news."

The change won't affect the behavior of long-term investors such as himself, Roy said.

Shares now remain suspended until after companies publish advertisements in at least one English-language and one Chinese-language newspaper. The exchange in its January newsletter said it proposes ending mandatory ad publication in the second quarter, Bloomberg News reported.

"It should improve the efficiency of the market," said Steven Leung, a Hong Kong-based director of institutional sales at UOB-Kay Hian Ltd. "It lets investors do what they want after they digest the information."

Hong Kong Exchanges' Williams said the likely options will be for trading in shares to be halted for 15 minutes, half an hour, or an hour.

"The exchange is a platform for trading," Williams said. "Shorter trading halts, as long as information is properly disseminated, would show overseas investors that this is a fair place to do business."

Shorter halts will bring Hong Kong' stock exchange in line with other Asian markets.

The Tokyo Stock Exchange suspends trading for 30 minutes after news that may substantially affect a share's price. In the Philippines, stocks are halted for at least 30 minutes after price-sensitive news and pending major announcements.

Singapore-listed companies can request a maximum three-market-day halt, without a minimum requirement, after material announcements. In Taiwan, there's no requirement for a suspension.