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A-share derivatives on the cards
By Hui Ching-hoo
Updated: 2007-03-06 09:00
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Banks and brokers in Hong Kong are showing interest in issuing derivatives related to mainland-listed stocks, a move analysts said would help the city consolidate its position as an international financial hub.
Cheril Lee, executive director and head of securitized derivative products at Goldman Sachs, revealed the firm intends to launch exchange traded fund (ETF) derivatives.
Lee referred to the A50 China Tracker, an ETF under Barclays Global Investors (BGI) that invests in A shares such as China Vanke and China Minsheng Bank.
"The ETF performed very well. Its daily turnover hit 730 million yuan on January 5, which prompted us to launch A-share warrants in Hong Kong," she said.
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The firm launched its first A-share derivative product on the Singapore Exchange (SGX) about a year ago.
"We considered launching the products in Hong Kong, but scrapped the plan due to the inactive response from the Hong Kong stock exchange," said Edmond Lee, senior vice-president of SG.
"We may issue A-share derivatives in Hong Kong if the local regulator responds positively," he added.
Hong Kong Exchanges and Clearing (HKEx) recently took an affirmative stance on the issuance of A-share derivatives for the first time.
Paul Chow, chief executive of HKEx, said earlier that the bourse is open-minded on the issuance of A-share derivatives.
"As long as they (the issuers) are well prepared for risk hedging, we don't see any problem," said Chow.
The HKEx's message is seen by some analysts as a signal that Hong Kong regulators are now encouraging market participants to take bolder moves in pushing the city's derivatives market.
That prompted some analysts to predict A-share derivatives could be launched sometime this year in Hong Kong.
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