HKEX File Photo

The first A-share derivatives product launched by the Hong Kong Exchanges and Clearing Limited (HKEX) based on the MSCI China A 50 Connect Index officially start trading on Monday.

Analysts believe that China's capital markets will attract more overseas investors as the onshore and offshore products and markets for the A-share index futures will advance coordinated development.

"This is the first offshore sector-balanced China A-share index futures supported and approved by Chinese regulators," MSCI CEO Henry Fernandez said at the market open ceremony.

Fernandez stressed that the A shares index futures will expand access and tools for international investors to navigate Chinese markets and improve their portfolios, while further developing the financial ecosystem of the Hong Kong Special Administrative Region, and underpinning its status as a global financial and risk management center.  

The futures contract based on the MSCI China A 50 Connect Index, which tracks the performance of 50 key Shanghai and Shenzhen stocks available via Stock Connect, and will provide international investors with effective risk management tools.

Moreover, the launch of China's A-share index futures on HKEX reflects Hong Kong taking a significant step in establishing a series of offshore A-share derivatives products, which will greatly enhance the enthusiasm of overseas institutions to enter the A-share market while better meeting the needs of foreign investors.

Analysts also pointed out that the A-share derivatives product will further attract long-term capital from overseas to A shares building on recent momentum.

The financial sector of the MSCI China A 50 Connect Index accounts for only 18.36 percent and the industrial sector accounts for 14.74 percent, whereas the financial sector of the FTSE China A50 index accounts for 37 percent with the industrial sector accounting for only 3.89 percent, according to media reports.

The MSCI China A50 Connect (USD) Index Futures fell 0.11 percent to 2735.2 points at the beginning of its first trading day.

Global Times