Center

A-share derivatives on the cards

By Hui Ching-hoo
Updated: 2007-03-06 09:00

If that becomes a reality, local investors will have another proxy to benefit from the rise of the mainland's stock market and its robust economy, analysts said.

That would offer an indirect way for Hongkongers to invest in yuan-denominated A shares.

Hongkongers are not currently allowed to directly buy A shares, except for a small number of qualified foreign institutional investors.

More importantly, the launch of such products would help Hong Kong consolidate its leadership in the region.

Though it is Asia's second-largest bourse, Hong Kong lags behind Singapore and the mainland in terms of derivatives trading.

Singapore allows initial public offerings and their derivatives set for trading on the same day, while in Hong Kong a stock's derivatives are available for trading five days after the stock is listed.

In terms of A-share derivatives, Singapore also leads.

It launched the world's first futures product based on the A-share stock index last September, prompting many Hong Kong-based analysts to urge Hong Kong issuers to follow suit.

As China's international exchange, Hong Kong should not lose its head start in launching A-share products.

"It's a sink-or-swim situation," said Casor Pang, an analyst with Sun Hung Kai Financial.

A cultural proximity and investors' familiarity with the mainland market, as well as its close economic ties with the mainland, will help it eclipse its peers.

(China Daily 03/06/2007 page15)