PSE started its extended trading hours today, Monday, October 3 as the first phase of the trading hours extension. Trading hours was extended until 1pm, from the previous closing hour of 12noon.
Of course, like all changes, this new development is met with mixed reactions. Some market participants say that the extra income they will earn from afternoon trades will not be enough to cover the extra overhead costs they will incur given the more hours they need to trade. While this may be true in the short run, I think this change is still for the better in the long run.
In the long run, I think that this shall be good for our local stocks market, and also to PSE stock as well. More trading hours give more time to participants to think and react to the market. It also enables the market to factor in events in and out of the country that may occur after lunch (and not to keep all the excitement and anxiety until 9:30am the next day which leads to emotional trading). The issue on overhead costs and not much trading in the afternoon should be temporary. Once afternoon trading picks-up, these issues should be addressed.
The next extension phase is expected to go live by 1Q2012, possibly in January which will extend trading hours to 3:30pm, but with a lunch break from 12nn-1:30pm. This move aims to align the trading hours with the regional practice (sadly we’re in a different time zone with FTSE or Dow). Further, this should enable PSE readiness in participating in the shared trading platforms with its South East Asian peers. The shared trading platforms is also expected to go live by 1Q2012, likely by March. On a lighter note, this should also enable us, stocks participants, to discuss and revise our battle plans over lunch, for another round of trading after lunch until 3pm. Now whether that’s a happy lunch or a tense lunch depends on market temperament.
There was actually a previous plan to extend trading hours back in 2000 (?) but it did not push through given economic conditions back then. The same issues were posed for this extension that finally rolled out, and I think our economic situation today is a lot more stronger compared to a decade ago. Likewise, in the years that have passed, we have seen emerging economies in our region. And there is at least a lesser focus on Western markets now since a new game is brewing right in our neighborhood. Being aligned with their practices, and being ready to connect with them, is therefore vital for our growth as well. We don’t want to be left behind right?
Interestingly, there is a more long term plan which includes other ASEAN countries, in terms of creating a unified trading bloc by 2015. More participants! That should be exciting. Who knows? Hong Kong and China might be next as well! Bullish dream!