Pedestrians pass by the office of HKEX in Hong Kong. File photo: VCG

Hong Kong Exchanges and Clearing (HKEX) on Monday launched a suite of futures contracts based on Asia and emerging market benchmarks compiled by global index provider MSCI in an effort to press forward its internationalization strategy.

Experts said that Hong Kong should prepare for possible financial sanctions from the US government, though they believe that the US has no way to steer Hong Kong's capital markets given the latter's internationalization level. 

According to the HKEX, the 10 futures contracts launched Monday are part of HKEX's new index licensing agreement with MSCI Inc announced in late May. In total, Hong Kong will introduce 37 futures and options contracts in tranches, benchmarked against MSCI indices. 

The second tranche of contracts will be rolled out on July 20, and some later contracts will be denominated in global currencies other than the greenback, such as the yen and the Singapore dollar. 

After the introduction of these derivative contracts, the HKEX will have the broadest suite of MSCI derivatives products based in the Asian time zone, according to a statement published on the official HKEX website.

The inclusion also marks further expansion of HKEX's derivatives market, which some experts said is as internationalized as the US market. 

"It will consolidate Hong Kong's role as an international financial hub by attracting more capital, particularly from emerging market investors, to converge in Hong Kong," said Xi Junyang, a professor at the Shanghai University of Finance and Economics.

Hong Kong is also mounting efforts to enhance its internationalization level at a time when the US is backing sanctions over the security law, some of which might pose a threat to Hong Kong financial markets in the future, experts said. 

According to Xi, it is possible that the US will roll out measures against Hong Kong's financial markets, such as restricting US companies' financial interactions with Hong Kong. 

Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, said that the US might attempt to attack the Hong Kong dollar in a similar way George Soros did during the Asian financial crisis. 

Despite those possible attacks, experts are confident that Hong Kong's financial market will not be severely undermined.

On one hand, global investors are dispersed on the Hong Kong capital markets. On the other hand, Chinese mainland capital is backing the Hong Kong market, whether in terms of foreign currency reserves or the rising proportion of mainland capital in Hong Kong stock markets, Dong said. 

"The liberalization of the HKEX has even surpassed the US markets. By no means can the US control or sway the Hong Kong financial markets on its own," Dong told the Global Times. 

In the face of rising pressure from the US, the mainland and Hong Kong should work closer together to manage financial risks, such as monitoring unusual capital flows and cracking down upon violations, Dong said.


Newspaper headline: HK launches MSCI futures