Hong Kong muscles in on Singapore’s China stock futures monopoly

Bloomberg

Hong Kong is starting futures contracts that make it easier for international investors to bet on mainland Chinese stocks, intensifying rivalry between the city’s bourse and its Singapore counterpart.
Analysts expect that the new product, which launches on Monday, from Hong Kong Exchanges & Clearing Ltd could take several years to gain traction, but that it will ultimately provide formidable competition to the offering available from Singapore Exchange Ltd.
While Singapore provides investors better liquidity, fewer holidays and a mature offshore derivatives ecosystem, Hong Kong has a stock trading link with mainland China and the underlying index the contracts will use has more balanced sector weightings, they said.
With huge global demand for exposure to China’s $12 trillion onshore equities market and Beijing cracking down on private enterprises ranging from education and technology sectors, there is increasing interest in the futures contracts to hedge risks.
There will be limited earnings boost for the Hong Kong bourse in the near term, and greater earnings downside risk for SGX, Citigroup Inc. analysts Yafei Tian wrote in a note earlier this week, adding the former looks better positioned in A-share derivatives in the longer term.
SGX shares slumped more than 4% on Aug. 23 after Hong Kong announced that it would launch the futures built on an MSCI Inc measure that gives access to 50 mainland stocks. HKEX soared almost 6% that day.