Futures linked to the CES China 120 Index are a step toward the convergence of stock markets in Hong Kong and China, according to an official from Hong Kong Exchanges & Clearing Ltd.
Futures tied to the gauge, which tracks the most liquid stocks listed in Hong Kong, Shanghai and Shenzhen, will begin trading in the special administrative region on Aug. 12. They will be the first derivative product that gives investors exposure to companies listed in both Hong Kong and China, said Calvin Tai, co-head of equities, fixed income and currencies at Hong Kong Exchanges, at a media briefing in Hong Kong today.
“Eventually the three markets will converge,” Tai said. “Not necessarily the exchanges, but the markets.”
The CES China 120 Index is maintained by China Exchanges Services Co., the joint venture between Hong Kong Exchanges and the two biggest mainland bourse operators formed last year as the companies seek to boost investment flows between the two markets. The gauge slumped 12 percent in 2013 through yesterday amid concern about slowing growth and a funding squeeze in the world’s second-largest economy.
The exchange will offer futures expiring in August, September, December and March. There will be no commission levy on the products for the first six months of trading, according to a statement from the exchange, which is planning to introduce options on the same underlying index.