[SHANGHAI] Global index publisher MSCI and the Hong Kong stock exchange said on Monday they will launch futures contracts on the MSCI China A Index to provide a hedging tool as international investor interest in Chinese mainland shares surges.
The license agreement with Hong Kong Exchanges and Clearing Ltd (HKEX), which will launch the new product, came less than two weeks after MSCI announced it would quadruple the weighting of Chinese shares in its global benchmarks later this year.
"With the evolution and sophistication of China's securities markets, we continue to see increasing participation of global investors who are demanding tools to enhance their risk management capabilities," Henry Fernandez, MSCI's chairman and chief executive officer, said in a joint statement.
The MSCI China A Index will comprise 421 large and mid-cap China-listed A-shares, representing the mainland portion of the MSCI Emerging Markets Index.
HKEX chief executive Charles Li said the 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 product launch will be subject to regulatory approval and market condition, they said.
Singapore Exchange's A50 Index Futures is currently the only offshore futures contract tracking the Chinese A-share market, according to the exchange's website.
Fang Xinghai, deputy head of China's securities regulator, predicted in January that foreign capital inflows to Chinese stocks this year will double to about 600 billion yuan (S$122 billion) from last year.