GF SEC: How should we view Nasdaq's 23-hour trading?

GF SEC: How should we view Nasdaq's 23-hour trading? GF SEC released a research report stating that trading instruments covering Asian hours already exist for US stocks, and it is expected that extended US trading hours will not have a substantial impact on AH trading. In the past, some Asian investors would shift ADR trading volume back to Hong Kong stocks after the US market close. Once 23-hour trading is implemented, these funds may be absorbed directly in the US market, Hong Kong stock trading volume may face diversion pressure, cross-market arbitrage efficiency may also improve, and the price gap between Hong Kong stocks and ADRs may be narrowed more quickly. GF SEC's main views are as follows: Learning from history, will extended trading have a substantial impact on AH shares? (1) Different trading targets will not have a direct impact on other markets. The previous round of extended trading hours was concentrated during the 1999-2000 dot-com bubble. Taking the Frankfurt Stock Exchange in Germany as an example, the biggest problem with extended trading was continuous quotations and trading volume. After maintaining it for only three years, because the extension did not bring about a transfer of pricing power in other markets, the closing time was again moved forward to 17:30. (2) What will have an impact on other markets is low trading costs and overlapping trading targets, not the extension of trading hours. Taking the London Stock Exchange as an example, it does not levy stamp duty on overseas stock trading, and market makers can continuously quote bid and ask prices for non-UK companies' stocks. Dutch stocks traded in London accounted for 50.3% of their home market trading volume, and the diversion rate for Sweden was 45.0%. (3) Trading instruments covering Asian hours already exist for US stocks, and it is expected that extended US trading will not have a substantial impact on AH trading. For example, Nasdaq after-hours trading, and the 2021 launch of the new venue Blue Ocean ATS to effectively extend trading hours, have not yet constituted a substantial impact on other markets. (4) The biggest impact on AH lies in the timing of pricing. AH pricing of events depends to a large extent on the US market. The 2025 reciprocal tariffs are a clear example. A-share investors' pricing of the event depended to a large extent on overseas markets: after the announcement on the evening of April 2, A-shares showed little reaction throughout April 3 (Thursday), and only after US stocks fell that evening did A-shares begin to catch up with the decline after the April 7 holiday ended. (5) Intraday volatility in technology growth sectors may amplify, while dividend sectors such as banks and utilities are expected to be less affected. For sectors such as semiconductors, optical modules, CPO, innovative drugs, and CXO, valuations often reference North American capital expenditure, global orders, overseas peers, and industry cycles. A move in US stocks during the session may trigger an immediate reaction in A-shares, without having to wait for the next day's higher or lower opening. The most direct impact on Hong Kong stocks may be reflected in liquidity facing diversion: in the past, some Asian investors would shift ADR trading volume back to Hong Kong stocks after the US market close. Once 23-hour trading is implemented, these funds may be absorbed directly in the US market, Hong Kong stock trading volume may face diversion pressure, cross-market arbitrage efficiency may also improve, and the price gap between Hong Kong stocks and ADRs may be narrowed more quickly. Finally, how will it affect Chinese equities? One must be strong oneself. GF SEC stated that several stock market operating indicators this year reflect the market's relatively pessimistic fundamental expectations for 2027including valuation changes this year for "all A-shares overall" and "key AI companies," as well as short-term sentiment indicators for the whole market and the STAR Market and ChiNext boards. This implies that investors have lowered their expectations for 2027 domestic demand fundamentals, external demand fundamentals, and AI industry chain fundamentals to relatively low levels. Therefore, in discussions with investors, it is clearly felt that the trading outlook for the next stage, including the market's path over the past few months, has basically revolved around [dividends + thematic investment] (such as AI applications, etc.). Under such baseline assumptions and pessimistic expectations, considering changes in rules such as US stock trading hours, liquidity for Chinese equities in 2027 will inevitably come under pressure. In fact, "one must be strong oneself." If major variables emerge in the factors affecting 2027 fundamentalsfor example: China breaks "fiscal discipline"; external demand continues its strong trend; AI sees new demand-side narratives and breakthroughsmarket expectations for fundamentals may reverse positively at any time, thereby bringing in more incremental funds to offset the adverse impact of funding conditions for Chinese equities in 2027. Risk warning Profit recovery falls short of expectations; overseas rate hikes exceed expectations; lock-up expirations overlap with position adjustment timing; geopolitical conflicts recur and policy intensity falls short of expectations.