China Financial Sector

The listings of major Mainland banks and insurance companies in Hong Kong have attracted international investment interest and trading focus.  Hong Kong Futures Exchange Limited (HKFE), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), is introducing the Hang Seng China H-Financials Index futures to meet the market demand for an investment and hedging tool specific to Mainland financial stocks listed on the Main Board of the Hong Kong securities market.

Hang Seng China H-Financials Index

The Hang Seng China H-Financials Index (HFI) is compiled by Hang Seng Indexes Company Limited, which introduced the index on 27 November 2006.  The HFI includes all H-shares in the Hang Seng China Enterprises Index (HSCEI) classified as "financials" in Hang Seng Indexes Company Limited's industry classification system.  The HFI is one of the leading indicators for tracking the performance of the Mainland financial stocks listed in Hong Kong.

Features of HFI Futures

EFFICIENT EXECUTION

Investors can establish a market position linked to the performance of a basket of major Mainland financial stocks with one single futures trade. 

COST EFFECTIVE

Trading and hedging a basket of Mainland financial stocks can be done in a capital-efficient manner as futures are traded on a margin basis and no stamp duty is charged.

MANAGING RISK EXPOSURE

Firm-specific risk is diversified when trading HFI futures. Investors holding Mainland financial stocks can use HFI futures to manage or adjust their risk exposure to the Mainland financial sector stocks. 

SPREAD TRADING

Investors can use HFI futures for spread trading against H-shares Index futures and options, based on their outlook for the relative performance of Mainland financial stocks versus the overall H-shares market.

CLEARING HOUSE GUARANTEE

Futures contracts are registered, cleared and guaranteed by the HKFE Clearing Corporation (HKCC), a wholly-owned member of the HKEx Group, reducing counter-party risk (HKCC's guarantee does not cover its Clearing Participant's obligations to its clients.  Investors should exercise due care and diligence when deciding through whom they will conduct business with).