Hong Kong Exchanges and Clearing Limited (HKEX) will introduce futures contracts on seven sectors of its stock market on Monday, 9 May 2016 to expand its well-established equity derivatives business and give investors more choices.
The new sector index futures comprise:
- CES Gaming Top 10 Index Futures
- Hang Seng Mainland Oil & Gas Index Futures
- Hang Seng Mainland Banks Index Futures
- Hang Seng Mainland Healthcare Index Futures
- Hang Seng Mainland Properties Index Futures
- Hang Seng IT Hardware Index Futures
- Hang Seng Software & Service Index Futures
A summary of the contract specifications for the new sector index futures is attached below.
The underlying indices are weighted by market capitalisation (market cap) with adjustments to reflect the constituent stocks' free floats, and there are caps1 to ensure an index is not dominated by one or two stocks. Each index can have up to 10 of the biggest Hong Kong-listed stocks in the sector. Selection criteria include stocks’ market cap and turnover. For further details, please see the Participant Circular about the new futures.
"We are introducing futures that will enable market participants to gain exposure to several key stocks in closely watched sectors such as software, Mainland Banks and Mainland Properties through just one contract," said HKEX Market Development Division Co-head Li Gang. "Investors will be able to use our sector index futures for risk management, and we think the new products will be very attractive to market participants with interest in the sectors covered by the products."
"Sector index futures build on our strengths in equity derivatives and Mainland China-related products," said HKEX Market Development Division Co-head Romnesh Lamba. "One of the key initiatives in our current strategic plan is to launch new equity derivatives with Mainland, Hong Kong and international underlying assets."