Shanghai reopening: stock exchange to release staff from sleeping on-site on June 6, breaking its ‘closed loop’ as city exits lockdown

·4-min read

The Shanghai Stock Exchange plans to allow all technicians, compliance officers and back-office clerks to leave a so-called closed loop, letting them commute from home every day from June 6, after mainland China’s financial hub lifted a citywide lockdown on Wednesday.

Some employees were allowed to leave the closed loop, where workers essentially sleep on-site or in dormitories nearby to avoid contact with outsiders, on Wednesday, according to two sources with knowledge of the matter who declined to be named, as they are not authorised to talk to the media.

Exchange staff have been locked in the building since late March to ensure trading goes on at China’s largest bourse. They were divided into two shifts to rotate work before this weekend.

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“Credit should be given to the exchange staff for their hard work and sacrifice,” said Ding Haifeng, a consultant at Shanghai-based financial advisory firm Integrity. “They kept equity trading running smoothly, even as the harsh lockdown of Shanghai disrupted every aspect of life and business.”

Shanghai started a phased lockdown on March 28 by shutting down Pudong, east of the Huangpu River, before locking the whole city down on April 1. The city, which reported a total of 626,600 Covid-19 cases since its current outbreak began on March 1, finally lifted the lockdown on June 1, allowing more than 22.5 million residents – or 90 per cent of its population of 25 million – to leave their compounds.

A large number of exchange employees had been staying at their offices a week before Pudong was sealed off amid a resurgence of coronavirus cases in Shanghai. The exchange’s decision to allow staff to leave the closed loop was in line with the city government’s commitment to restoring life and businesses in a quick manner by late June, and was aimed at improving staff members’ health and well-being.

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The cost of the lockdown, however, is still high as far as the Shanghai exchange is concerned. The bourse, the biggest among mainland China’s three exchanges, has been lagging behind the Shenzhen exchange, its main rival for listings and turnover.

The Beijing Stock Exchange was only set up late last year. Before that, the Shanghai bourse had long been deemed the bigger of the two exchanges in the world’s second-largest capital market.

At the height of the sell-off in March, which was spurred by the lockdown in Shanghai, the average daily trading value of the city’s bourse was only 40 per cent of the combined turnovers of the two exchanges in Shenzhen and the financial capital.

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Shanghai’s proportion has rebounded slightly to 44 per cent after the lifting of the lockdown on Wednesday.

But the Shanghai lockdown has strengthened a trend since 2018, when the values of the shares that changed hands in Shenzhen surpassed those in Shanghai. At its nadir in September 2020, Shanghai’s share of the combined turnovers was only 30 per cent.

With more investors flocking to trading in Shenzhen, the exchange in China’s technology hub has been able to steadily close its gap with Shanghai in terms of market cap as well.

The market values of companies listed on the Shenzhen exchange have increased by more than 20 per cent over the past three years to 32 trillion yuan (US$4.77 trillion), or equivalent to 74 per cent of Shanghai’s market cap, versus 60 per cent in 2019.

Shanghai’s reopening also means that the city’s financial industry, with about 1,700 licensed institutions and nearly 500,000 employees, is gradually returning to normalcy. Money managers that have slept in offices will now be able to commute between work and home.

However, to comply with the government’s measures for the prevention of a resurgence in the pandemic, some asset managers, such as HSBC Jintrust Fund Management, have since June 1 started to rotate staff that can work in office by dividing them into two teams. HSBC Jintrust said that it will increase office staffing gradually to full staffing eventually, depending on the pandemic.

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