TOKYO (Kyodo) -- Extended trading hours are expected to present more opportunities for investors to trade, though analysts note that swifter corporate information disclosure may be needed to maximize the effect of the Tokyo Stock Exchange's latest tactic to entice investors.
Starting Tuesday, the Tokyo stock market will close 30 minutes later, at 3:30 p.m., marking its first change in closing time in 70 years. The opening time remains unchanged at 9 a.m.
The TSE aims to improve convenience for investors and strengthen its global competitiveness after reclaiming its status as Asia's largest bourse by market capitalization earlier this year.
"Our mission is to maximize trading opportunities and provide as many trading chances as possible," said a senior manager of the strategic planning group in the TSE's equities department in a recent interview with Kyodo News.
The expanded five-and-a-half-hour trading window, excluding the midday break, still lags behind the New York Stock Exchange's six and a half hours and the London Stock Exchange's eight and a half hours.
The decision to lengthen trading hours followed a major system failure on Oct. 1, 2020, that halted trading for an entire day, marking the worst outage since the exchange fully computerized trading in 1999.
The bourse expects the extension to provide not only more trading opportunities but also additional time for system restoration, even if only for a short period, in the event of a failure.
All listed companies are required to disclose important information immediately upon a decision or occurrence. However, in September, the TSE urged companies to implement measures to enhance timely disclosure rather than delaying the filing of critical corporate information in preparation for the longer trading hours.
The request comes as far fewer companies release earnings during trading hours in Japan. According to the bourse, 1,862 companies, or roughly 80 percent of the companies listed on the TSE that reported earnings for the April-June quarter this year, disclosed their results after the market closed, while the other 20 percent did so during trading hours or the midday break.
With the market now open until 3:30 p.m., some companies are bringing forward their schedule for July-September earnings from after-hours to during trading hours to enhance investor accessibility.
Honda Motor Co. said it will move up its earnings disclosure from 3 p.m. to 1 p.m. in response to the TSE's request, starting Wednesday when it is scheduled to release its latest quarterly results.
"We expect that providing information earlier will increase market accessibility, potentially leading to more active trading," a Honda spokeswoman said.
Heavy machinery maker IHI Corp. also plans to announce its July-September earnings at 1 p.m., two hours earlier than before.
IHI said that the release before market close should help investors digest results promptly within the same day after the release.
When a company announces news after the market closes, investors in the Tokyo market must wait until the next trading day to act on the information, although traders may react earlier if the company's shares are listed on overseas markets.
Some companies, however, still plan to release their earnings after trading hours.
Of the 1,103 firms that reported April-June earnings between 3 p.m. and 3:29 p.m., around 800, as of Oct. 18, intend to announce their July-September results on Tuesday or later, with about 30 percent delaying their releases to 3:30 p.m. or later, according to the TSE.
They have expressed concern that releasing earnings during trading hours could lead to hasty investor reactions, potentially raising volatility, with some investors struggling to fully analyze the information.
"We are concerned that our company's stock may become volatile until investors fully understand the results," a spokesperson at Zensho Holdings Co., which operates its Sukiya beef bowl chains, said, though the company decided to report its latest earnings at 2 p.m., an hour earlier than before.
Atsushi Kamio, a senior researcher at the Daiwa Institute of Research, said close communication with investors is as vital as timely disclosure.
"The key is not only to respond to the TSE's request...but also to build stronger communication with investors by carefully considering what information to disclose and when to better meet their needs," Kamio said.
Companies will need to provide clear and prompt explanations alongside their earnings releases to help investors interpret the information smoothly, market analysts say.
