The Hong Kong stock exchange closes today after 31 years of trading. The closure is the price paid for the rapid rise in internet and electronic trading. Hong Kong is highly unlikely to be the last stock exchange to become redundant. As increasing amounts of trading are carried out online, the old stock exchange floors will gradually disappear.
How will this affect the markets? On the face of it, it shouldn’t. However, the modern analytical software can spot trends significantly faster than humans checking prices on a board. Or even on their terminals in the stock exchange. The future of stock exchanges is limited! The day is not far away when all stock exchanges as we know them will become redundant.
The Bull and Bear in Wall Street will become museum pieces, although you can bet that there will be great resistance to the progress of trading into the 21st century. The excitement of the floor may be about to dampen down.
Some say this will be a renaissance, but that term refers to ‘rebirth’. It is not a rebirth that is emerging but a natural progression from the old way to the new: just as ticker tape progressed into screen displays. Perhaps the stock exchanges will disappear, and in their place will become home-based computer terminals.
Forex has largely become the domain of computers and even small time dabblers seeking to make easy money. Will the stock market go the same way? Much depends on regulation and access of the public to online exchanges.
Is this the beginning of the end of traditional stock exchanges? At one time, there were 1,000 people working in the Hong Kong Stock Exchange. Now there is none. It’s not for a lack of expansion. A market handling rocketing Asian stocks due largely to the electronics business is not dying. It is increasing in size yet traditional stock exchanges are under threat.
The excitement on the floor of the Hong Kong Stock Exchange has gone. Computer-aided predictions provided to relatively calm computer analysts are the new future. Amateurs sitting at their PCs will be able to buy and sell shares for profits and loses. They can even now do this as easily as they do worldwide in Forex markets. There may be no more need for stock exchanges as we know them.