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Extended trading hours to prompt short-term boost to trading volume

All News 09:34 January 22, 2016

SEOUL, Jan. 22 (Yonhap) -- South Korea's stock market may see a sudden boost in its daily trading volume following an extension of trading hours, but the effect may be short-lived, market watchers said Friday.

On Thursday, Korea Exchange Chairman Choi Kyung-soo said he will work to extend trading hours by half an hour as part of efforts to bolster growth of the country's own financial market while also enhancing its connection with other major markets in Asia through overlapping operating hours.

Theoretically, a 30-minute or an 8 percent extension from the current six-hour operations should increase the daily trading volume by at least 8 percent, the observers said.

In reality, however, the volume could go either way depending on market conditions, they noted.

"Once the trading hours are extended, the trading volume could also increase somewhat. But how big of an effect it will have is not easy to predict, while it will be naive to say the volume will increase by the same margin of the increase in trading hours," Daishin Securities analyst Kang Seung-gun said.

For instance, the main bourse of Singapore enjoyed an astonishing 41 percent boost to its daily trading volume shortly after extending its operating hours in August 2011.

However, its annual trade volume plunged 18 percent in the first 12 months following the extension.

Hong Kong, whose stock market hours were extended by one hour in March 2011, also had its daily trading volume surge 45 percent in the first month, but its annual volume slipped 6 percent, according to the analysts.

"An 8 percent increase in operating hours should theoretically add about 8 percent to the trading volume, but considering recent flows of funds, it will be difficult to say the volume will in fact increase," said Cha In-hwan, an analyst from Hana Financial Investment Co.

Following a rate hike by the U.S. Federal Reserve late last year, the first of its kind in nearly a decade, foreign investors have been exiting the South Korean stock market en masse.

Foreigners have remained net sellers of South Korean shares since Dec. 2, setting a new selling streak record and offloading nearly 6 trillion won (US$4.12 billion) as of Thursday.


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