Hong Kong securities traders and brokers, who last year lost the longest lunch break of the world’s 20 biggest exchanges, marched to the city’s bourse and booed at executives to protest a further reduction.
About 1,000 brokers and restaurant staff gathered at the headquarters of Hong Kong Exchanges & Clearing Ltd. yesterday, booing Chief Executive Charles Li and Chairman Ronald Arculli when they came out of the office to receive a letter of protest for the plan to cut the lunch hour further from March 5.
Hong Kong Exchanges’ Li is seeking to cut the lunch break to one hour from 90 minutes, arguing it may boost business as trading hours are brought in line with China’s markets. Rivals in the region have also enacted similar measures with Tokyo shortening its midday halt and Singapore scrapping its break.
“We’ll work together to find ways to solve the lunch problem,” Li told reporters yesterday after meeting the protesters. “It’s necessary to move on. We shouldn’t stop our reform.”
Li cut the break from two hours last year. Shanghai’s trading hours run from 9:30 a.m. to 3 p.m. with a 90-minute stoppage between 11:30 a.m. and 1 p.m. Hong Kong will operate from 9:30 a.m. to 4 p.m., with a one-hour break between noon and 1 p.m. after the proposed change.
The protesters, a mixture of gray-haired brokers and young women in suits and sweaters, marched from Statue Square in the central business district to the bourse’s headquarters after the market closed. To chants of “Hong Kong Exchange is inhumane,” the protesters waved picket signs and raised fists.
“All the brokers in Hong Kong are so stretched,” said Ruann Cheung, who works at Lippo Securities Holdings Ltd. “With a shorter lunch break, we cannot concentrate in the afternoon.”
Cheung and five colleagues were gathered around a picket sign that said: “You want us to trade till we drop. We want you to drop before we trade!”
The booing grew louder as Arculli and Li walked among the protesters.
“The important thing is they came out to receive our letter, showing they are paying attention,” said Patrick Lam, chairman of the Hong Kong Securities & Futures Employees Union and organizer of the demonstration. “Last time, they just sent a senior official to receive the letter.”
The letter listed the reasons for opposing the trading hour extension, including possibilities of health problems, unemployment and social instability.
Hong Kong is competing with Shanghai to be the center for Chinese trading, and the move to align itself more closely with markets in the mainland comes as more Chinese companies list in the city.
Mainland Chinese companies accounted for 46 percent of the HK$17.5 trillion ($2.3 trillion) market value of Hong Kong’s Main Board on Dec. 30, exchange data shows, up from 16 percent in 1997, when the U.K. returned Hong Kong to China.
The exchange has to cater to interests in China and internationally, and “if we don’t do it, we may lose some competitive edge to rivals,” Arculli said.
The Tokyo Stock Exchange last year reduced its lunch break to one hour. Singapore Exchange Ltd. (SGX) scrapped its break, joining Australia, South Korea and India on the list of Asia-Pacific markets that trade without an interval.
The shorter lunch break has hurt restaurants, said Jacky Choi, the assistant manager at Treasure Lake Golden Banquet, which has 15 stores in the Central and Sheung Wan business districts. Income for each of the restaurant dropped by about HK$10,000 a day after the first reduction in trading break, he said.
Brokers use the break to communicate with clients and one hour is not enough, the union’s Lam said. The bourse’s argument that it will make the exchange more competitive is not a strong enough reason, he said.
“Turnover at the Hong Kong exchange hasn’t increased since the first phase of the lunch cut,” said Lam.
The average daily turnover in the city has been HK$67.8 billion since the bourse reduced its break on March 7 last year to the current 90 minutes, according to data compiled by Bloomberg. That’s less than the HK$69.8 billion average for the same period a year earlier, when traders still enjoyed their two-hour lunch break. The average number of common shares traded has dropped by 28 percent to 11.1 billion.
Hong Kong’s benchmark Hang Seng Index (HSI) tumbled 20 percent last year, its first annual drop since 2008, with developers and banks tumbling as China took steps to curb inflation and Europe’s debt crisis threatened global growth. The decline compares with a little changed Standard & Poor’s 500 Index and an 11 percent drop for the Stoxx Europe 600 Index.
“Maybe we can compromise to make everyone happy,” said Louis Lai, a stock broker at Phillip Securities who is also part of the union. “There’s no urgent need to further cut it back to one hour.”