Merc and Hong Kong move on China index futures

The contract will be based on the FTSE/Xinhua Index of 25 Chinese and Hong Kong companies listed on the Hong Kong Stock Exchange.

“These are the top 25 Chinese stocks listed in Hong Kong and the first product we have listed with Chinese exposure,” said Tina Lemieux, managing director, products and services at the CME. High volatility is expected to draw investors to the futures, she added.

The contract could also offer arbitrage opportunities between the FTSE/Xinhua index contract and index futures listed and traded in Hong Kong, as well as exchange-traded funds, Lemieux said.

Meanwhile, Hong Kong Exchanges and Clearing will introduce Hang Seng China H-Financials Index (HFI) futures on April 16, pending Securities and Futures Commission approval.

The HFI is a free float-adjusted, market capitalisation-weighted index of major mainland financial stocks. It currently has eight constituents - five major banks and three large insurance companies - representing 18% of the exchange's market capitalisation and 24% of its turnover.

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