HKEX will introduce its first regional stock index futures contract on June 11, the latest step in its efforts to expand its international offerings. The contract is based on the MSCI All Country Asia ex Japan index, which covers 11 Asian equity markets including China, Hong Kong, India, South Korea and Taiwan. Top holdings include Tencent, Samsung and Alibaba.
The exchange’s existing equity index contracts are all based on stocks listed in Hong Kong or mainland China. HKEX, which will be the first exchange in Asia to offer futures on this regional index, faces competition from the Singapore Exchange, which offers a suite of Asian stock index contracts, and Eurex, which offers futures on the same Asia ex Japan index.
“MSCI’s All Country Asia ex Japan index is a key benchmark for the world’s asset managers and we look forward to being the first exchange in Asia to offer MSCI AxJ futures,” said Li Gang, HKEX’s co-head of market development. “Our MSCI AxJ Futures will be supported by liquidity providers to allow fund managers and other investors to get Asian equity exposure quickly and efficiently for risk management or other purposes."
To make the new contract more appealing to institutional investors, HKEX opted for the net total return version of the index, which incorporates dividend payments as well as the price movements of the constituent stocks. Currently there are 11 exchange-traded funds that track the index, including one listed in Hong Kong.