The halt caused stocks to lose value. A decline of 1% seen for the MSCI Hong Kong Index.IT declined further because of the derivatives trading halt.
Martin Wong, head of exchange-traded solutions in the Asia Pacific for the equity derivatives team at BNP Paribas SA said, “I’ve been doing this since 2003 and I don’t recall anything like this.”He also said, “Because the futures market is closed, there is no efficient way to hedge.”
The contracts for the Hang Seng Index totalled 60,070 for September before the halt. It declined by 80% when compared with the previous day.
The 20-day average of the volumes in call and put options suggested that trading for the same dropped by 5%.
Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd said, “It’s very troublesome for investors as we can’t hedge.” He also said, “If something unexpected happened this afternoon, basically we are unable to respond effectively.”