Global index compiler MSCI and the Hong Kong Exchanges and Clearing Ltd (HKEX) are set to bring in futures contracts on the MSCI China A Index.
The move is subject to regulatory approval and market conditions.
The new product will include 421 large and mid-cap A shares traded on the Shanghai and Shenzhen exchanges that are accessible via the Stock Connect. The MSCI China A Index will represent the A-share portion of the MSCI Emerging Markets Index, HKEX said in a statement.
The latest announcement comes after MSCI decided to increase the weight of China A shares in its global benchmarks from 5% to 20% in three increments by November 2019. Heavier weightings for Chinese-listed shares in benchmark indices reflects China’s importance as the world’s second-largest economy and its integration into global capital markets.
Commenting on the agreement, Charles Li, chief executive at HKEX said: “This new agreement with MSCI will facilitate the development of a key risk management tool for international investors who need to manage their A share equity exposure.”
“The international trading community has wanted a product like this for some time, and HKEX’s MSCI China A Index futures contracts will directly address their needs,” he added.
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