HKEX to launch first A-share derivatives product

HONG KONG, Aug. 20 (Xinhua) -- Hong Kong Exchanges and Clearing Limited (HKEX) will launch its first A-share derivatives product to provide international investors with a new risk management tool for their portfolios of Stock Connect eligible A-shares.

The exchange said Friday that it has entered into a new license agreement with MSCI 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 index futures product will be launched on Oct. 18, 2021.

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.

HKEX Chief Executive Officer Nicolas Aguzin said Friday's announcement marks a key step forward in furthering the progress of building an offshore mainland equities derivatives suite in Hong Kong.

The new agreement builds on the earlier license agreements between HKEX and MSCI. HKEX has already launched a total of 41 derivatives based on MSCI indices.

The importance of the Chinese mainland in global investment portfolios is growing, evidenced by its market capitalization weight in the MSCI Emerging Markets Index increasing from 18 percent in December 2009 to 34 percent in August 2021, said Henry Fernandez, chairman and chief executive officer at MSCI.

Since its launch in 2014, Stock Connect, the landmark mutual market access program linking the Hong Kong and mainland equity markets, has become the key channel for international investors to access the A-shares market.

Trading volumes under the program reached fresh records in the first quarter of 2021, with average daily turnover of northbound and southbound trading at 126.8 billion yuan (19.5 billion U.S. dollars) and 60.8 billion Hong Kong dollars (7.8 billion dollars), respectively.