Hong Kong Exchanges and Clearing Limited (HKEx) and FTSE Xinhua Index Limited (FXI), the leading China index provider established by FTSE Group and Xinhua Finance, today announced they have signed an agreement that will enable HKEx to introduce futures and options on the FTSE/Xinhua China 25 Index (FXI China 25). Trading is scheduled to begin on 23 May.
The FXI China 25, a tradable index designed to serve as a base for derivatives and other financial instruments, tracks the performance of the 25 largest and most liquid Mainland enterprise stocks (H shares and red chips) listed in Hong Kong. Each constituent's weighting in the index is free-float adjusted and capped at 10 per cent, and frequent reviews ensure the index remains a true reflection of the market.
The FXI China 25 Futures and Options will complement the wide range of Mainland-China related products currently trading on HKEx's securities and derivatives markets. These include the nearly 200 H-share and red-chip companies listed on The Stock Exchange of Hong Kong Limited, a wholly-owned subsidiary of HKEx, stock futures and stock options on individual H shares and red chips, H-shares Index Futures and H-shares Index Options.
"This agreement allows us to build on our strength as the premier international marketplace for Mainland China-related securities and derivatives," said HKEx Chief Operating Officer Patrick Conroy. "Backed by the international indexing experience of the FTSE Group and the Xinhua Finance's expertise on Mainland China-related companies, FXI is an ideal business partner for this project."
FTSE Chief Executive and FXI Co-chairman Mark Makepeace and Fredy Bush, Xinhua Finance CEO and FXI Co-chairman, said the launch of the contracts is further proof that FXI is firmly established as the leading index provider for the China markets.
"These products are an important contribution to investors in the China markets because they allow them to hedge investments in the cash markets in a way that was not possible before," said Ms Bush. "The potential China stock index futures market is huge and FXI is committed to developing indices to serve that need," said Mr Makepeace.
About HKEx
Hong Kong Exchanges and Clearing Limited (HKEx) is the publicly listed holding company of Hong Kong's stock and derivatives exchanges and their associated clearing houses. Its stock exchange is one of the world's 10 largest in terms of market capitalisation. HKEx provides a comprehensive range of products and services for issuers and investors. Trading as well as clearing and settlement on HKEx's exchanges is fully electronic.
For further information HKEx, please visit www.hkex.com.hk.
About FTSE Xinhua Index
Established in late 2000, FTSE Xinhua Index (FXI), a joint venture between Xinhua Financial Network, a subsidiary of Xinhua Finance Limited and FTSE Group, came into being to facilitate the creation of real-time indices for the Chinese markets. The indices can be used as a basis for the trading of derivatives, index-tracking funds, Exchange Traded Funds and as performance benchmarks. The combination of FTSE's expertise in international indexing with Xinhua Finance's strong presence and capabilities in China creates a level of expertise in the Chinese market that is unprecedented. Providing the combined coverage for the Shanghai and Shenzhen exchanges, all of the FTSE Xinhua indices are designed according to internationally proven index methodology to ensure products are transparent, clear and consistent. For daily data and further information, please visit www.ftsexinhua.com.
Selection Criteria
H shares and Red Chips are eligible for the FXI China 25. The selection criteria of the constituent stocks of FXI China 25 are as follows:
| 1. |
FXI China 25 consists of the largest 25 companies by full market value (subject to the following rules 2 & 3); |
| 2. |
A company will be inserted into the FXI China 25 at the periodic review if it rises to 15th position or above when the eligible companies are ranked by full market value (before the application of any investibility weightings). |
| 3. |
A company in the FXI China 25 will be deleted at the periodic review if it falls to 36th position or below when the eligible companies are ranked by full market value (before the application of any investibility weightings). |
| 4. |
A constant number of constituents will be maintained for the FTSE/Xinhua China 25 Index. Where a greater number of companies qualify to be inserted in the Index than those qualifying to be deleted, the lowest ranking constituents presently included in the index will be deleted to ensure that an equal number of companies are inserted and deleted at the periodic review. Likewise, where a greater number of companies are deleted than those qualifying to be inserted, the securities of the highest ranking companies which are presently not included in the Index will be inserted to match the number of companies being deleted at the periodic review. |
List of Constituent Stocks and their Weightings of FXI China 25 Index (as of 18 April 2005 )