Hong Kong bourse operator Hong Kong Exchanges and Clearing (HKEX) officially launched the trading of 10 MSCI Index futures contracts on Monday. The indexes track various stocks from capital markets across the Asia-Pacific region and Australia. The launch of the new index futures is aimed at further cementing the city's position as the premier global financial destination through the expansion of its products.
The new US Dollar-denominated derivative products are the result of a partnership between the bourse operator and the MSCI, which was first established in May. Under the agreement, the New York-based index compiler allowed the use of its 37 equity gauges.
HKEX markets head, Wilfred Yiu, said in a statement that the introduction of the index futures marks a new chapter for the exchange and the country's capital market as a whole. He added that with the new products, the city's exchange should become more attractive to investors as they do complement existing product suites. At the same time, the additions are expected to enhance overall liquidity.
The 10 MSCI Index futures contracts are mostly linked to indices that cover stocks in exchanges in Asian countries such as Japan, Thailand, Malaysia, Indonesia, India and Australia. For now, trading of the indexes is limited to Hong Kong investors. HKEX is planning to offer the products to mainland investors in the future through the Stock Connect Program.
According to the bourse operator, it managed to win the contract to offer the new derivatives from the Singapore Exchange. The MSCI chose Hong Kong mainly for its recent implementation of easing measures aimed at attracting more tech startup listings. Singapore already has a standing partnership with MSCI and is offering around two dozen futures contracts.
HKEX announced that it plans to offer an additional 23 futures contracts on the MSCI Index. The contracts mainly track stocks from countries such as Vietnam and the Philippines. The trading of those contracts is expected to begin before the end of July and in August. The bourse operator will then be adding another four contracts, which are still subject to regulatory approval.
News of the new products managed to bump up HKEX's stock prices by around 2.3 percent on Monday. The stock closed at HK$353.20 per share. However, the surge was mainly caused by rising investor anticipation for a number of upcoming secondary listings of US-listed Chinese firms. Companies such as JD.com and NetEase had led the new wave of returning tech giants to the city, raising close to $5 billion in combined capital.