Hong Kong trading resumes as mainland markets and Stock Connect remain closed until October 8

Mainland Chinese markets are closed for the week-long National Day holiday and will not resume trading until Thursday, October 8. Hong Kong's stock market, however, reopens on Friday, October 2, after being closed on Thursday for the holiday.

The Hong Kong exchange will operate on Friday during its regular session hours of 09:30-12:00 and 13:00-16:00 local time, and also on October 5, 6, and 7. These four trading days will take place without Stock Connect, the cross-border trading link. HKEX's Stock Connect calendar indicates that Northbound and Southbound trading are suspended from October 1 through October 7, as the link functions only when both exchanges are open. Normal Stock Connect operations will restart on October 8.

This means that China-focused and dual-listed shares in Hong Kong will trade without participation from mainland investors, likely resulting in thinner, more offshore-driven liquidity.

The Shanghai and Shenzhen stock exchanges will remain closed for the entire seven-day holiday. The Shanghai Composite index closed Wednesday, the last session before the break, at around 3,840, up about 0.3%.

Shanghai's futures and gold markets are also closed. The Shanghai Futures Exchange, China Financial Futures Exchange, and Shanghai Gold Exchange will reopen on October 8. They will remain shut on Saturday, October 10, which is a make-up working day for offices, as exchanges do not operate on weekends. Night trading at the Shanghai Futures Exchange will resume on the evening of October 8.

With onshore markets shut, the offshore yuan will see price discovery with reduced depth, and traders will lose Chinese futures price signals for the week, as I noted in my earlier piece. Any news during the holiday will first be reflected in offshore pricing, increasing the risk of catch-up moves when mainland markets reopen on October 8. Market participants will also watch the scale of the People's Bank of China's liquidity operations around the holiday for signs of what funding conditions look like when markets return.