On August 20, the Hong Kong Stock Exchange announced that it would launch its first A-share futures product on October 18.
This futures contract will provide international investors with a tool to effectively manage the risk of their eligible A-share portfolios of Shanghai, Shenzhen, and Hong Kong Stock Connect, reflecting that more and more international investors are entering the mainland China market through the Shanghai, Shenzhen, and Hong Kong Stock Connect. The MSCI China A50 Connectivity Index will track the performance of only 50 major Shanghai and Shenzhen stocks traded through the Shanghai, Shenzhen, and Hong Kong Stock Connect. This offshore trading and industry-representative Chinese A-share index futures product will be launched on October 18, 2021, which is of historic significance.
The first A-share futures product complements the company's current strategy of “building in China” and “linking the world”. Company CEO EU Guan Sheng said: A-share index futures mark a key step for the Hong Kong Stock Exchange to promote the establishment of an offshore mainland China stock derivatives series in Hong Kong. The long-term cooperative relationship between the Hong Kong Stock Exchange and MSCI is also closer, working together to develop Hong Kong into a leading derivatives trading center in Asia and enhance the depth and breadth of investment products in the Hong Kong market. As a leading market in the Asian time zone, this new product will provide investors with a tool to effectively manage asset risk associated with A-shares. At a time when the A-share market is getting more and more attention from foreign and international investors, this futures product will bring endogenous impetus to the trading volume of the Hong Kong Stock Exchange, which in turn will drive an increase in the revenue of the Hong Kong Stock Exchange. Furthermore, the Hong Kong Stock Exchange invested in the newly established Guangzhou Futures Exchange at the beginning of this year to further strengthen its confidence in being “based in China” and play an important role in the internationalization of mainland China.
The “Embrace Technology” strategy will continue to drive product and platform innovation. In order to further enhance its competitiveness and influence as a global financial hub, the company announced in the first half of 2021 that it plans to implement and launch a new platform, FINI, in the fourth quarter of 2022 to simplify and digitize the current settlement system. Additionally, LME will launch a new digital registration platform, LMEPassport, in the third quarter of 2021 to encourage disclosure of sustainability standards, which will be used first by aluminum contracts. The company also has STAGE, which continues to develop a sustainable and green consulting platform. Continuously innovating its technology platform has brought new opportunities for the Hong Kong Stock Exchange to become a leading international exchange.
Investment advice: The company deeply implements the three strategies of “based in China,” “linking the world,” and “embracing technology.” Futures products to be launched will increase the trading volume of the Hong Kong Stock Exchange, which in turn will drive an increase in the revenue of the Hong Kong Stock Exchange. Bloomberg's average target price is HK$551.48, corresponding to an increase of 12.50%. Buying is recommended.