Hong Kong Exchanges and Clearing (HKEX) has launched its new A-share derivatives contract, the MSCI China A 50 Connect Index Futures.
The offshore A-share equity and derivatives trading venue will offer global investors and risk managers an efficient solution to trade and manage their China exposure.
“We are very excited to today launch our MSCI A 50 Connect Index Futures, confirming Hong Kong as the global international go-to market for accessing China,” said Nicolas Aguzin, chief executive of HKEX.
“This new product further strengthens Hong Kong’s role as the gateway to China for global investors and marks another great step forward in supporting the further internationalisation of China’s capital markets.”
The new futures contract is based on the MSCI China A 50 Connect Index, a sector-balanced index which picks 50 names from the largest stocks listed in Shanghai and Shenzhen available via Stock Connect, targeting at least two stocks from each sector.
According to HKEX, this can prevent overweighting in specific sectors such as financials and underweighting in new economy sectors, providing investors with a risk management tool that truly represents China’s economy.
“China connectivity is Hong Kong’s unique advantage, setting us apart from other international financial centres around the world. We look forward to continuing to develop Hong Kong’s leading position as Asia’s derivatives hub,” added Aguzin.
International investors will be provided with an effective risk management tool through the new contract which will allow them to manage their portfolios of Stock Connect eligible A-shares.
This reflects the increasing global reliance on Stock Connect to access Mainland China’s equity markets since its launch in 2014.
The US Commodity Futures Trading Commission has certified HKEX’s new contract to be offered and sold to people in the US. US investors will be able to trade the new contracts at launch.
In addition, HKEX is offering a trading fee holiday for the first six months of launch to further promote the development of the contract.