SHANGHAI/HONG KONG (Reuters) – Global index publisher MSCI and the Hong Kong stock exchange said on Monday they would release futures contracts on the MSCI China A Index to offer a hedging tool as global investor interest in Chinese mainland stocks surges. The license agreement among MSCI and Hong Kong Exchanges and Clearing Ltd (HKEX), for you to release the new product, comes much less than weeks after MSCI introduced it’d quadruple the weighting of Chinese stocks in its global benchmarks later this year.
HKEX Chief Executive Charles Li stated the agreement with MSCI gives “a key hazard control tool for worldwide buyers who want to manage their A-proportion equity exposure.” The new product is amongst a host of different derivatives released with the aid of global exchanges in recent years to assist manage publicity to mainland Chinese markets. Singapore Exchange Ltd’s A50 Index Futures contract, for instance, allows offshore investors to track 50 Chinese A-shares directly.
Li stated on a convention call on Monday that the brand new HKEX futures settlement will song the whole 421 big- and mid-cap A-stocks covered in the benchmark MSCI Emerging Markets Index. HKEX said in an assertion that it is yet to determine a launch date and that the product remains concerned with regulatory approval and marketplace situations. China has also been opening up its home derivatives market as A-shares are included in international indexes. Draft regulations in January said overseas establishments could have access to onshore derivatives,
together with financial futures, under the Qualified Foreign Institutional Investor (QFII) scheme and its yuan-denominated equal, RQFII. Fang Xinghai, deputy head of China’s securities regulator, predicted in January that foreign capital inflows to Chinese shares this year would double to approximately 600 billion yuan ($89.76 billion) from last year. Last week, Fang advised local media that regulators have been taking measures to open the index futures market.
