SGX: Gain Exposure to Drivers of China’s New Economy with SGX FTSE China H50 Futures
SGX is excited to expand our China proposition with addition of the SGX FTSE China H50 Index Futures contract (“FCH”) to our pan-Asia shelf of equity derivatives products on 23 November 2020.
The FTSE China 50 Index is a hyper-liquid basket of stocks, tracking the top 50 biggest Chinese names listed in Hong Kong. FCH is closely correlated to other benchmark Hong Kong indices like HSCEI, but has a higher weightage in New Economy sectors like Tech, Consumer Services and Healthcare. With a high capping level of 9% for each individual constituent, traders can use FCH to gain quick access to tech and consumer giants like Tencent, Alibaba, Xiaomi and Meituan Dianping. In addition, FCH is well positioned for the “homecoming” of US-listed Chinese tech companies who seek secondary listings in Hong Kong. New mega-IPOs listed in Hong Kong will be eligible for Fast Entry into the FCH underlying index at close of business on the 5th day of trading.
China has bounced back from virus scares and the IMF projects China to be the world’s only economy with positive growth of 1.9% in 2020. In the longer-term, China’s growth is projected to accelerate to 8.2% in 2021. This provides a golden trading opportunity amidst a gloomy backdrop of expected 4.4% global contraction in 2020. With FCH, customers can ride on China’s fast recovery and express views on Mainland’s rapid expansion under China’s recently announced 5-year plan to drive domestic demand and power economic growth.
FCH is CFTC certified, quanto-USD denominated, and already well tracked by international institutional investors, with passive ETFs such as the iShares China Large Cap ETF (FXI) which alone has substantial AUM of more than US$3.4 billion. Given recent heightened market volatility due to ongoing US-China tensions and COVID-19, FCH is an excellent tool for risk management with SGX’s round-the-clock trading hours and overnight T+1 session until 5.15am Singapore time. Trading FCH on SGX is also highly cost-efficient with over 60% margin offsets against other liquid SGX equity derivatives products such as the SGX FTSE China A50, SGX SiMSCI, SGX Nikkei 225, SGX FTSE Taiwan and SGX Nifty index futures contracts.
*Projected GDP growth for China is from the IMF World Economic Outlook for October 2020
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The SGX FTSE China H50 Index Futures (the “Product”) has been developed solely by Singapore Exchange Derivatives Trading Limited. The Index is calculated by FTSE International Limited (“FTSE”) or its agent. FTSE and its licensors are not connected to and do not sponsor, advise, recommend, endorse or promote the Product and do not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Index or (b) investment in or operation of the Product. FTSE makes no claim, prediction, warranty or representation either as to the results to be obtained from the Product or the suitability of the Index for the purpose to which it is being put by Singapore Exchange Derivatives Trading Limited.
“FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE under licence. All rights in the FTSE China 50 Index (the “Index”) vest in FTSE or its licensors. Neither FTSE nor Russell nor any of their affiliates or licensors: (a) assumes any liability, losses, damages, expenses or obligations in connection with any derivative product based on the Index; or (b) accepts any liability for any errors or omissions, fitness for a particular purpose or the results to be obtained from the use of the Index or related data. No party may rely on the Index or related data contained in this communication which Index and data is owned by FTSE or Russell or their affiliates. No use or distribution of the Index is permitted without FTSE’s or Russell’s express written consent. Neither FTSE nor Russell promotes, sponsors or endorses the content of this communication nor any financial or derivative product that it relates to.