HKEx to start after-hours trading to win new foreign business

Announcement comes amid surge in interest in Chinese companies converting B-shares to H-shares

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Hong Kong Exchanges & Clearing (HKEx), the world’s largest exchange company, has won regulatory approval to start after-hours futures trading as it seeks to expand business hours, move into globally traded asset classes and attract more foreign investors – notably those in Europe and North America.

The company will start after-hours trading in futures on the Hang Seng Index and the H-shares Index as of April 8 from 5.00 pm to 11.00 pm local time, in addition to the regular trading hours of 9.15 am to 12 noon and 1.00 pm to 4.15 pm, the company explains in a news release. It is also considering instituting after-hours trading in gold futures at a later date.

After-hours trading ‘can help attract more European and US investors to HKEx’s derivatives market,’ the exchange notes. It will also ‘enable market participants to hedge or adjust their positions in response to market news and events during the European and US business day’ and ‘enable HKEx to cater for international interest in renminbi products in the future.’

HKEx, which carried out a $2.2 bn takeover of the London Metals Exchange in December last year, adds that its implementation of after-hours futures trading is a mandatory step toward moving into trading of foreign exchange and other classes of assets traded on a global basis. The exchange says it will start briefing market participants on the new processes in March.

The announcement comes amid increased interest in Chinese stocks following the decision by property developer China Vanke to convert its Shenzhen-listed B-shares to Hong Kong-listed H-shares last month. China Vanke shares surged 10 percent – the maximum allowed under the market’s regulations – the day after it announced the plan in January.

The conversion opens up the company’s stock to greater foreign investment and has investors watching for similar moves from other mainland companies. After the China Vanke announcement, Guangdong-based drug maker Livzon Pharmaceutical Group said it would make a similar conversion, boosting its own shares in trading.

China International Marine Containers Group, the largest container manufacturing firm in the world, was the first company to announce it would make the move to H-shares last year. Chinese B-shares have risen since the container group announced the move, benefiting from speculation that more companies would follow the group’s example. The Shanghai B-Share Index and the Shenzhen B-Share Index include a combined total of 106 companies.