Whenever inclement weather hits Hong Kong early in the morning, the city’s stock traders turn to the local observatory website to see if they need to go to work or not.
Hong Kong has a detailed series of weather alerts that determine whether businesses, schools and public transport operate. This includes the stock market -- the world’s third largest and where more than US$24 billion worth of shares change hands on average every day.
This sensitivity to weather is something that Nicolas Aguzin, chief executive officer of Hong Kong Exchanges & Clearing Ltd. is struggling to understand.
“I was like, we are not opening? What’s happening?” Aguzin said, describing his reaction to being told the US$6.8 trillion market wouldn’t open because the Black rainstorm signal was raised on June 28.
Aguzin didn’t indicate any changes will be imminent. But his comments illustrate how some of the rules governing the bourse are looking increasingly antiquated as the global finance industry adjusts to remote working amid the pandemic. The stock market only reopened in the afternoon on June 28 as rain abated. Last year, it closed for half a day in August and the whole day in October when tropical storms neared.
“People are already used to working from home,” Aguzin told a seminar at the Asia Society Hong Kong Center on Thursday. “The first question that I had was, should we leverage everything that we have learnt to find a way to see how we can continue operating?”
Tropical cyclone warnings range from 1-10, with 10 being a direct hit. Rainstorm warnings go from amber to red and black -- the latter being the most severe. Stock market hours are dependent on the level of the alert and the time it is raised or lowered.
Aguzin joined HKEX as CEO in May from JPMorgan Chase & Co., where he was most recently CEO of its international private bank. He’s been based in Hong Kong since 2012, according to the exchange operator.
Tom Chan, chairman of Institute of Securities Dealers in Hong Kong, says the industry has infrastructure in place to ensure continuous trading in bad weather. Most orders are received and executed electronically, while the pandemic has shown staff are able to operate remotely, Chan said.
Hong Kong’s history as a major port meant a cyclone warning system was important to minimize the loss of life for mariners. The topography of the island -- roads and buildings built into steep hillsides -- makes the city vulnerable to flooding and landslides from torrential rain that typically comes during the summer months. A black rainstorm warning means more than 70mm (2.8 inches) of rain has fallen in an hour and is likely to continue.
Hong Kong last raised its highest storm signal in 2018 when Typhoon Mangkhut hit the city, leaving roads blocked, buildings damaged and low-lying areas flooded. There have been 16 such maximum-level storms since records began in 1946. On Tuesday, the strong wind signal no. 3 was in force due to a nearby typhoon but the Observatory didn’t expect a higher warning.
“Of course I don’t want to put anyone at risk in terms of having to go into the office during a typhoon or a black storm,” Aguzin said. “But the reality is that there must be a way where we can make sure that when people trade, the market is open.”
Photo credit: Bloomberg
