The faster the A-share futures are pushed, the better.
After the implementation of the “three times of the A-share” in the A-share market, the HKEx (00388) made a breakthrough in the A-share futures products and was authorized by MSCI to launch the MSCI China A-Share futures. The market believes that MSCI China A-share futures are only the beginning. With the closeness of China and Hong Kong, the coverage of A-share futures and the amount of information obtained by investors, Hong Kong A-share futures are expected to grab a lot of market share of Star A50 futures.
With the increasing weight of A-shares in the MSCI Emerging Markets Index, the total value of foreign-invested A-shares has also increased accordingly. The market has long expected that “three times in the market” will drive more than $60 billion in capital inflows. At the same time that A-shares have increased, investors’ demand for A-share products has become increasingly strong. The Hong Kong Stock Exchange’s strong attack on related derivatives markets is aimed at huge business opportunities.
Qi Qingmin, vice chairman of the China Securities Regulatory Commission, said that the launch of A-share futures by the Hong Kong Stock Exchange is a good thing for the Chinese and Hong Kong stock markets, as the two markets are linked. The Hong Kong Securities Regulatory Commission also welcomes the agreement between the Hong Kong Stock Exchange and MSCI to help the development of the China-Hong Kong market. The Administration does not comment on the expansion plans of individual products, but emphasizes that the SFC has been working closely with the Hong Kong Stock Exchange on product development.
Li Xiaojia: The first project of the Olympics
Li Xiaojia, chief executive of the Hong Kong Stock Exchange, said that before the agreement with MSCI, it has fully interacted with the mainland’s supervision and transactions. The HKEx has submitted an informal application to the CSRC. The next step is to prepare the information for the report. Regarding the degree of approval and market conditions. “The market expects A-share index futures to be long-term, and the product launch should be as fast as possible."
Li Xiaojia described MSCI China A-share futures as the “first Olympic Games project". In the future, it will naturally develop other A-share related products, and may also cooperate with China Securities, FTSE and other indices. At present, it is impossible to predict the trading of products. Emphasizing that the A50 index only covers large companies, the MSCI China A-Share Index is more accurate for foreign investors, and “the Hong Kong market has a more vital ecosystem with China recently, and there is no place to compete effectively with Hong Kong in the long run."
At present, foreign investors must hedge their A-share products in the offshore market, only through the SGX A50 index futures. The average daily turnover of the current A50 futures is about US$5 billion (about HK$39 billion). The turnover was about 435,000. The SGX said that it welcomes the Chinese market to increase its internationalization and relax the degree of foreign investment. As the interaction of different markets will generate greater liquidity, it is believed that participants of the SGX can also benefit.
Industry: Funds pass small step for more interoperability
Zhang Huafeng, a member of the Legislative Council of the financial sector, hopes that A-share futures will be able to be launched as soon as possible, but this is only one of the small steps of the fund-to-finance. In the future, it will still strive for more interconnection, including more derivative products of A-share products. Hedge products listed on the stock market.
Zhou Wenling, a senior securities analyst at the Swiss Baosheng private bank in China and Hong Kong, said that compared with Singapore, Hong Kong investors have an advantage in obtaining information on A shares, and they are buried closer to the A-share market, and more importantly, foreign investment is It is more convenient for Hong Kong to participate in the A-share market through interconnection channels. It is also more convenient to hedge in Hong Kong. I believe that after the launch of Hong Kong A-Shares, it will be able to steal a lot of business.
Morgan Stanley believes that the launch of A-share futures is an important step, meaning that a piece of jigsaw–hedging tool that is missing when investing in A-shares has been found. When the risk management ability of buying and selling A-shares is improved, it will simultaneously drive derivative products and northbound trading volume. Among them, the Hong Kong Stock Exchange is the biggest beneficiary of capital inflows to China. It is expected that the relevant profit contribution will be apparent in 2020.