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Another stab at extending SET trading hours

The Stock Exchange of Thailand (SET) is planning to conduct a feasibility study and hold a public hearing on extending trading hours in an attempt to increase trading volume and value, which have declined this year.

The bourse has studied this matter over the past six years, but did not make a decision. Prime Minister Srettha Thavisin recently instructed the SET to thoroughly assess and evaluate the benefits and disadvantages of extending trading hours.

According to a preliminary survey, relevant parties believe the best time to extend trading hours is in the early afternoon, opening afternoon trade at 2pm, a half-hour earlier than the current starting time of 2.30pm. This move would shorten the mid-day break by half an hour, running from 12.30pm to 2pm.

SET president Pakorn Peetathawatchai said extending trading hours may help to increase daily trade on the stock market.

The exchange will search for appropriate trading hours to increase volume, aiming to remain consistent with other international bourses, he said.

The SET wants operating hours that will yield the greatest benefit, as differing operating hours can suit different groups of investors, said Mr Pakorn.

Q: WHAT IS THE DIFFERENCE IN TRADING HOURS BETWEEN THE SET AND OTHER REGIONAL BOURSES?

Each market opens trade at different hours according to the local time, while the duration of trading hours also differs.

The Thai stock market opens from 10am to 4.30pm local time, with two trading sessions. The morning session is from 10am to 12.30pm, followed by a two-hour break. The afternoon session is from 2.30pm to 4.30pm, providing 4 hours and 30 minutes of trade per day. The main indices are the SET and the Market for Alternative Investment.The Chinese stock market has trading hours from 9.30am to 3pm, with a break from 11.30am to 1pm. There are four total trading hours per day, with the major indices the MSCI China Index and CSI300.The Hong Kong Stock Exchange has a morning session from 9.30am to noon and an afternoon session from 1pm to 4pm for five hours and 30 minutes of trade daily, with the HSI the main index.The Japanese stock market’s trading hours are from 9am to 3pm with a one-hour break from 11.30am to 12.30pm. The bourse has five trading hours per day and the main index is the Nikkei 225.The South Korean stock market’s trading hours are from 9am to 3pm without a break, giving the main index KOSPI six trading hours per day.In Singapore, trading hours run from 9am to 5pm without a break. The STI, the most important index, has eight operating hours per day.The Vietnamese bourse operates from 9am to 2.45pm, with a break from 11.30am to 1pm. Daily trading hours total 4 hours and 15 minutes, with the main indices the VNI and HNXI.The Indian stock market operates from 9.15am to 3.30pm without a break. The main index Sensex has total trading hours of 6 hours and 15 minutes per day.

Q: HOW DO STAKEHOLDERS FEEL ABOUT THE PROPOSAL?

Participants in the Thai capital market have differing opinions, with some saying extending trading hours would not increase trading volume much.

Some traders recommended the government instead refrain from collecting taxes if it wants to attract more investments to local exchanges.

Mr Pakorn said results from past studies showed the benefits from extending trading hours could be minimal.

“But now I think the proposal should be reviewed again,” he said.

The Thai bourse’s operating system can support trading at different periods during the day.

Value investor Niwes Hemvachiravarakorn said the more urgent issue is restoring investor confidence, which can be rebuilt in part by abolishing the government’s plan to tax investment in foreign stocks.

Paiboon Nalinthrangkurn, chief executive of Tisco Securities and chairman of the Investment Analysts Association, said starting SET trading at 10am is appropriate because the Thai market opens later than other Asian exchanges.

“That gives us an advantage because investors can see trends from other international markets before the Thai market opens. If stock markets in the West such as the Dow Jones index fell sharply, other Asian markets that open earlier than the SET will absorb the bad news and are likely to fall more than the Thai bourse,” he said.

“The shock in our country will be lessened. But the downside is what happens abroad may influence our home market as well.”

If the SET wants to extend the trading hours, it can shorten the break and start the afternoon session at 1pm instead of 2.30pm, said Mr Paiboon.

“This approach may not increase volume much, but if you want to do it, you can because it’s not difficult,” he said.

Prakit Siriwattanaket, managing director of Merchant Partners Asset Management, said if the SET wants to extend trading hours, it should extend the morning session to be in line with international markets.

This extension would allow investors to monitor the direction of foreign markets, especially in Asia, but extending the evening session would not make sense, said Mr Prakit.

In his view, extending the operating hours can increase trading on the SET, but improving the investment atmosphere is more important.

Extending trading hours will be more useful to investors who trade derivative warrants (DWs) and depositary receipts (DRs) related to foreign stocks, such as DR Hong Kong stocks, said Mr Prakit.

“For example, now you have to wait until 2.30pm to trade DRs, and by that time the Hong Kong market is nearly closed,” he said.

“If you can start at 2pm, you have more time to trade DRs on the Hong Kong stock market.”

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