Hong Kong to expand indices, derivatives and yuan-denominated products: HKEX CEO

Hong Kong Exchanges and Clearing (HKEX) is planning further measures to boost market liquidity, attract more international investors and expand the use of China’s currency, including through yuan-denominated gold futures and stock trading, according to a blog post by its CEO on Monday.

The plans come as the city steps up efforts to reinforce its position as a leading international financial centre, following priorities outlined in the government’s policy address and the city’s five-year development plan.

“We intend to meet this moment by building a multi-asset ecosystem spanning equities, fixed income, currencies, commodities, derivatives, indices and data,” Bonnie Chan Yiting wrote.

Alongside efforts to refine listing rules and attract more issuers, Chan said the bourse operator would continue working with mainland Chinese partners to add real estate investment trusts, or Reits, into the connect schemes and include yuan counters in the southbound Stock Connect programme, measures aimed at both boosting yuan usage and market liquidity.

The southbound Stock Connect allows mainland China-based investors to buy eligible Hong Kong-listed shares.

HKEX will also advance yuan internationalisation by expanding Hong Kong’s fixed-income, currency and commodities ecosystems.

“The renminbi [yuan] is increasingly attractive as a financing and investment currency because it combines a large pool of liquidity with the prospect of long-term internationalisation,” Chan said.

Investors were seeking greater access to yuan-denominated assets as well as tools to invest, finance and manage risk in yuan throughout the investment life cycle, she added.

Issuance of HKEX-listed dim sum bonds rose 14 per cent year on year to 266.9 billion yuan (US$39.9 billion) as of September 24, putting the market on track for a record year.

“We look to add more bond futures with different maturities over time, helping investors manage interest-rate risk across the curve and supporting a fuller offshore renminbi yield curve,” Chan said.

Gold is a key part of HKEX’s strategy. Since relaunching its physically delivered US dollar gold futures contracts in July, trading volume and open interest have reached record highs, attracting banks, trading houses and gold producers.

“Next, we plan to launch a redesigned renminbi-denominated gold futures contract and build more renminbi-denominated precious metals products, extending its role in commodity trading and risk management,” Chan said.

Taken together, these initiatives presented a compelling opportunity for Hong Kong, she added.

More indices are also in the pipeline, with HKEX exploring ways to deepen collaboration between onshore and offshore index ecosystems.

Such cooperation could support product innovation while giving international investors more effective benchmarks as they evaluate and increase allocations to China’s capital markets, Chan said.

“Looking ahead, we will continue broadening choices for investors, including exploring opportunities to expand our suite of equity derivatives and futures products linked to mainland Chinese and regional markets,” she said.

The exchange will roll out an additional 12 single-stock option classes in November, each with weekly and monthly expiries, building on the 38 weekly stock options launched so far this year.