HKEX jumps on China A-share index futures product launch
08:43, 23 August 2021
Stock exchange operator Hong Kong Exchanges and Clearing (HKEX) was among the top gainers on the benchmark Hang Seng index on Monday, after the company said it will launch its first Mainland China equities-based futures contract that will help global investors manage risk when investing in China.
Shares in HKEX rose 5.5% to HKD488.8 on Monday after the company announced on Friday that it entered into a new license agreement with index provider MSCI to launch a futures contract based on the MSCI China A 50 Connect Index.
The MSCI China A 50 Connect Index tracks the performance of 50 key Shanghai and Shenzhen stocks, targeting at least two stocks from each sector.
Risk management
“This new contract will provide international investors with a new and effective risk management tool to manage their portfolios of Stock Connect eligible A-shares,” the company said in a press release.
Future contracts are used by corporations and investors to hedge themselves against unfavourable price movement in the underlying asset that would result in the investor facing unexpected losses in the future.
International investors can access certain A-shares of companies listed on the mainland stock exchanges of Shanghai and Shenzhen via the Stock Connect programme.
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Rising interest
HKEX’s Stock Connect revenues jumped 78% year-on-year in the first six months of 2021, underscoring the rising interest in Chinese equities from global investors looking to tap into the world’s second largest economy’s meteoric growth.
On Friday, the Hong Kong bourse said the offshore China A-share index futures product will be launched on 18 October 2021.
“The investment industry is undergoing significant transformation and investments are becoming more complex and diversified, leading to a rise in demand for enhanced trading and risk management solutions,” said Henry Fernandez, chairman and CEO at MSCI.