Hong Kong to launch first China A shares derivative

Hong Kong Exchanges and Clearing has said it will launch its first China A shares derivatives product in line with its ambition to become the “leading global market in the Asian timezone”.

HKEX said in a statement on Friday it has reached agreement with index firm MSCI to launch on October 18 an MSCI China A50 Connect Index futures contract.

It will be the exchange’s first China A shares future and builds on a relationship between HKEX and MSCI that has seen the exchange launch more than 40 MSCI-based contracts in recent years.

HKEX chief executive Nicolas Aguzin (pictured) said in a media call on Friday: “This is significant for China as the new A shares derivatives product will drive even more international investor interest into and demand for mainland China equities, supporting the future development and internationalisation of the China capital market.”

Aguzin, who only took over as HKEX chief in May, said: “Our new A share derivatives product will be the next game-changing development to support mainland China’s financial market development. This is also great news for Hong Kong as it further reinforces Hong Kong’s role as the leading global market in the Asian timezone.”

The futures contract based on the new MSCI A shares index represents HKEX’s latest challenge to the Singapore Exchange, the only Asian market that currently offers a China A shares product.

SGX’s FTSE China A50 futures contract traded 7.8 million lots in June and 47 million contracts in the first six months of this year, according to data from trade body FIA.

SGX was also the Asian home to MSCI linked contracts until HKEX signed in May last year a landmark deal with the index firm to launch 37 futures and options based on MSCI Asia and Emerging Markets indices.

Aguzin said the launch of the futures contract based on the new MSCI China A50 Connect index will offer international investors greater confidence to trade the underling mainland listed shares, boosting the domestic Chinese equities market.

The MSCI China A50 Connect index is based on the 50 largest Shanghai and Shenzhen listed stocks in the China A share large cap universe.

Aguzin, a former JP Morgan private banker, said in May after taking the helm at HKEX it is important the exchange group remains “China-anchored”.