New stock index futures contract starts Aug 12

Tracks mainland companies listed in Hong Kong and China.

Hong Kong Exchanges and Clearing said the new stock index futures contract follows the CES China 120 Index maintained by China Exchanges Services Co Ltd.

Launched at the end of 2012, CES is a joint venture between China’s three stock exchanges: Hong Kong, Shanghai and Shenzhen. The new product was launched to create synergy between the three exchanges.

The CES China 120 Index comprises the 80 largest A-share companies on the Shanghai and Shenzhen stock exchanges, and the 40 largest companies on the HKEx, including H-share companies and Red chips.

H-shares are companies incorporated in the mainland and listed in Hong Kong. Red chips are companies based in China, incorporated elsewhere and listed in Hong Kong.

HKEx CEO Charles Li said the new product marks a milestone for the three exchanges’ cooperation. He believes the three will see more fruitful gains emerging from the cooperation,

Analysts said the product will help investors optimize their China equity exposure. Investors can trade this one product and have exposure to Chinese equities in both Hong Kong and on the mainland. Before, they would have had to buy a combination of products to achieve that goal.