Typhoon Talim forces Hong Kong’s US$5.2 trillion stock market into trading halt

Hong Kong felt the devastating blow of Typhoon Talim as it forcefully swept its US$5.2 trillion stock market off into a trading halt today. Hong Kong Exchanges & Clearings Ltd cited this extreme weather event as the cause for the suspension, a decision markedly disrupting the day’s trading flow.

This unprecedented event not only put the scheduled New Media Lab’s stock debut on hold but additionally, compelled the postponement of court hearings. The extreme conditions also directly impacted China Connect Northbound, leading to significant trading disturbances.

Against the backdrop of Hong Kong’s trading, a pivotal strategy is in place, where the morning trading activity on stocks, bonds and derivatives is dropped once a Signal No.8 or above strikes past 9am. The afternoon session faces cancellation if the signal does not recede to No.3 or below by noon. Consequently, schools shut down alongside the advice for businesses to employ caution, and the public is informed of potential transportation disruption.

Typhoon Talim, translating to “sharp” or “cutting edge” in Filipino, reportedly hovered approximately 270 kilometres southwest of Hong Kong at midday. The weather observatory noted that it’s likely to journey from west to northwest at around 18 kilometres per hour, generally towards the Leizhou Peninsula. Disturbingly, within the past hour, the typhoon was caught packing gusts over 129 kilometres per hour in Hong Kong.

The financial industry world over has been fast to adapt to remote working in response to the pandemic, rendering severe weather-prompted trading halts relatively archaic. With the occurrence of extreme weather events projected to multiply as a result of climate change, these trading suspensions may become increasingly inconvenient, reported Bloomberg News.

The fact that most modern-day orders are electronically executed only emphasises the requirement for Hong Kong to ensure uninterrupted trading, regardless of severe weather. It’s worth noting here that Singapore’s rival hub has never paused trading in its stock exchange owing to weather disruptions.

All eyes are now on Financial Secretary Paul Chan’s assertion from earlier this year, where he committed to exploring possible mechanisms to permit stock trading even under severe weather conditions. The city’s rail operator, the MTR Corp has also chimed into the growing conversation, claiming that rail services would operate at limited frequencies, and notifying of the extension in airport check-in service close-out time from 90 minutes to 120 minutes going forward.

Typically weathering around six typhoons annually, usually between June and October, Hong Kong has seen only a few of them result in closing down markets or schools. November was the last instance when Typhoon Nalgae, a severe tropical storm, led to such closures. The Hospital Authority has revealed that three people suffered injuries during the current typhoon and were medically attended.

As of 11am in local time, the government call centre had received 18 reports of fallen trees. However, thankfully, no report of landslides or flooding had been registered.