GF Securities has released a research report stating that the U.S. stock market already has trading tools covering Asian trading hours, and it is expected that extended U.S. trading hours will not have a substantial impact on A-share and H-share trading.

In the past, some Asian investors would shift ADR trading volume back to Hong Kong stocks after the U.S. market closed. Once 23-hour trading is implemented, this portion of capital may be directly absorbed in the U.S. market, and 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.

The main views of GF Securities Co.,Ltd. (000776) are as follows:

Looking at history: Will extended trading hours have a substantial impact on A-shares and H-shares?

(1) Different trading targets will not directly impact other markets. The previous round of extended trading hours was concentrated during the 1999-2000 dot-com bubble period. Taking the Frankfurt Stock Exchange in Germany as an example, the biggest problem with extended trading was continuous quoting and trading volume. After only three years, because the extension did not bring about a transfer of pricing power from other markets, the closing time was again moved forward to 17:30.

(2) What impacts 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 company stocks. Dutch stocks traded in London accounted for 50.3% of their home market trading volume, and the diversion degree for Swedish stocks was 45.0%.

(3) The U.S. stock market already has trading tools covering Asian hours, and it is expected that extended U.S. trading will not have a substantial impact on A-share and H-share trading. For example, Nasdaq after-hours trading and the 2021 establishment of Blue Ocean ATS, which effectively extended trading hours through a new venue, have not yet caused a substantial impact on other markets.

(4) The biggest impact on A-shares and H-shares lies in the timing of pricing. The pricing of events in A-shares and H-shares depends to a large extent on the U.S. stock market. The 2025 reciprocal tariffs are a clear example. A-share investors' pricing of the event depended heavily on overseas markets: after the announcement on the evening of April 2, A-shares reacted little throughout the day on April 3 (Thursday), and only after U.S. stocks fell that night did A-shares begin to catch up with declines 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. Sectors such as semiconductors, optical modules, CPO, innovative drugs, and CXO often value themselves by reference to North American capital expenditure, global orders, overseas peers, and industry cycles. Once the U.S. market moves during the session, A-shares may react immediately, without waiting for the next day's gap up or gap down.

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 U.S. market closed. Once 23-hour trading is implemented, this portion of capital may be directly absorbed in the U.S. 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 this affect Chinese stocks? True strength comes from within.

GF Securities stated that several stock market operating indicators this year reflect the market's relatively pessimistic fundamental expectations for 2027, including the valuation changes this year for "the entire A-share market" and "key AI companies," as well as short-term sentiment indicators for the whole market and the ChiNext and STAR Market boards. This implies that investors have lowered their expectations for 2027 domestic demand fundamentals, external demand fundamentals, and the AI industry chain fundamentals to relatively low levels. Therefore, during exchanges with investors, it was 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. Under such baseline assumptions and pessimistic expectations, considering changes in rules such as U.S. stock trading hours, liquidity for Chinese stocks in 2027 is bound to come under pressure. In fact, "true strength comes from within." If factors affecting 2027 fundamentals undergo major changes, for example: (1) China breaks "fiscal discipline"; (2) external demand continues its strong trend; (3) AI sees new demand-side narratives and breakthroughs. Then market expectations for fundamentals may reverse positively at any time, bringing in more incremental capital to offset the unfavorable impact of funding conditions for Chinese stocks in 2027.

Risk warning: Profit recovery may fall short of expectations; overseas interest rate hikes may exceed expectations; lock-up releases and position adjustments may overlap in timing; geopolitical conflicts may recur and policy strength may fall short of expectations.