Hong Kong’s stock exchange has signed an agreement with MSCI to offer futures contracts on the A-share portion of the index provider’s flagship Emerging Markets index in November, laying the groundwork to finally allow international investors to hedge risk from their exposure to China’s stock market.
“This new agreement with MSCI will facilitate the development of a key risk management tool for international investors who need to manage their A-share equity exposure,” said Charles Li, HKEX chief executive, in a statement on Monday.
The MSCI China A Index, for which futures are to be made available, will comprise 421 large and mid-cap stocks listed in Shanghai and Shenzhen on a pro forma basis and accessible via the stock connect programs between those mainland Chinese stock exchanges and that of Hong Kong Exchanges and Clearing. HKEX said the China A Index would represent the A-share portion of the MSCI EM index.