HKEX Launches First A-Share Derivatives

HKEX Launches First A-Share Derivatives

Hong Kong Exchanges and Clearing Limited is today pleased to announce the launch of its first A-share derivatives product. 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, reflecting the increasing global reliance on Stock Connect to access Mainland China’s burgeoning equity markets.

HKEX has entered into a new license agreement with MSCI, a leading provider of mission critical decision support tools and services for the global investment community, to launch a futures contract based on the MSCI China A 50 Connect Index, which tracks the performance of 50 key Shanghai and Shenzhen stocks available via Stock Connect. This offshore sector-balanced China A-share index futures product will be launched on 18 October 2021.

HKEX Chief Executive Officer Nicolas Aguzin said: “Today’s announcement marks a key step forward in furthering our plans to build an offshore Mainland China equities derivatives suite in Hong Kong. This exciting news further strengthens our long-term partnership with MSCI and reflects our commitment to developing Hong Kong as Asia’s premier derivatives hub, expanding the breadth and depth of our product offering in Hong Kong.”

“As the global markets leader in the Asian timezone with a unique role connecting China and the world, we believe this new product will act as a key risk management tool for investors in managing their A-share equity exposure,” said Mr Aguzin.

Henry Fernandez, Chairman and Chief Executive Officer at MSCI, added: “The importance of China in global investment portfolios is growing, evidenced by the country’s market capitalisation weight in the MSCI Emerging Markets Index increasing from 18 per cent in December 2009 to 34 per cent in August 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. As part of our commitment to empowering global investors to better manage their portfolios, we are very pleased to expand our partnership with HKEX through this new license agreement.”

This new agreement builds on the earlier licence agreements between HKEX and MSCI and underscores HKEX’s ongoing strategic partnership with MSCI, following the successful launch of a suite of MSCI Asia and Emerging Market futures and options last year. HKEX has already launched a total of 41 derivatives based on MSCI indices.

The MSCI China A 50 Connect Index is designed to have a comprehensive representation of the Chinese economy by including 50 stocks of the largest stocks in the China A-share large-cap universe, and by targeting at least two stocks from each sector. The index comprises 50 Stock Connect eligible underlyings and historically has a high correlation to the performance of main MSCI A-share indices.

Since its launch in 2014, Stock Connect, the landmark mutual market access programme linking the Hong Kong and Mainland China equity markets, has become the key channel for international investors to access the A-shares market and has helped facilitate the inclusion of Chinese A-shares into key global indices.

Stock Connect trading volumes reached fresh records in the first quarter of 2021, with average daily turnover of Northbound and Southbound trading significantly increased to RMB126.8 billion and $60.8 billion respectively.

Source: HKEX

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