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HKEX to launch MSCI China A 50 Connect Index Futures

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MSCI has signed a license agreement with Hong Kong Futures Exchange Limited, a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), to allow HKEX to launch an index futures contract based on the new MSCI China A 50 Connect Index, subject to regulatory approvals.

This new agreement will add to the suite of MSCI Asia and Emerging Market futures and options launched by HKEX in 2020, and underscores the ongoing strategic partnership between MSCI and HKEX.

Henry Fernandez, Chairman and Chief Executive Officer at MSCI, says: “The importance of China in global investment portfolios is growing, evidenced by the country’s market capitalisation weight in the MSCI Emerging Markets Index increasing from 18 per cent in December 2009 to 34 per cent in August 2021. The investment industry is undergoing significant transformation and investments are becoming more complex and diversified, leading to a rise in demand for enhanced trading and risk management solutions. As part of our commitment to empowering global investors to better manage their portfolios, we are very pleased to expand our partnership with HKEX through this new license agreement.”

Nicolas Aguzin, HKEX Chief Executive Officer, says: “Today’s announcement marks a key step forward in furthering our plans to build an offshore Mainland China equities derivatives suite in Hong Kong. This exciting news further strengthens our long-term partnership with MSCI and reflects our commitment to developing Hong Kong as Asia’s premier derivatives hub, expanding the breadth and depth of product offering in Hong Kong. As the global markets leader in the Asian timezone with a unique role connecting China and the world, we believe this new product will act as key risk management tool for investors in managing their A-share equity exposure.”

As the latest addition to the MSCI China Index series, the MSCI China A 50 Connect Index is designed to capture the performance of the 50 largest securities across all 11 Global Industry Classification Standard (GICS) sectors, offering broad diversification reflecting the Chinese economy. 

Using an innovative sector-neutral approach and based on the Stock Connect program, the Index mirrors the sector weight allocation of its parent index, the MSCI China A Index, and aims for sector balance by including the two largest securities from each GICS sector.

The Index can serve as the basis for index-linked investment products, such as exchange traded funds (ETFs), exchange traded notes (ETNs), mutual funds, structured products and other indexed vehicles.

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