The Hong Kong Stock Exchange (HKEX) has unveiled plans to launch futures contracts based on A-share indices in a bid to enhance the appeal of the domestic Chinese share market to offshore investors.
HKEX announced on 20 August that the futures contract based on the MSCI China 50 Connectivity Index will be launched on 18 October and consist of 50 of the largest Chinese A-shares, including at least two stocks from each industry.
On the same date the China Securities Regulatory Commission (CSRC) said that the launch of A-share futures contracts would help to attract more long-term offshore funds to the domestic Chinese market.
CSRC said that it had worked with Hong Kong securities regulators to improve cooperative mechanisms for the supervision of derivatives in order to facilitate the launch of the new products.
“This move will be of benefit to enriching the risk management tools of offshore investors investing in A-shares, and further attract allocations of offshore long-term capital to A-shares, consolidating and maintaining Hong Kong’s status as an international financial centre.”
A source said to the Chinese central bank’s official news outlet that CSRC “places heavy importance upon expanding the opening of domestic share index futures, and in future will actively drive opening of domestic share index futures in accordance with the needs of China’s capital market reforms and its development and operating conditions.”