Brokers lukewarm on yuan futures night trading
Brokers have poured cold water on a planned review by Hong Kong Exchanges and Clearing that could see yuan currency futures added to the night trading session.
The exchange is looking to boost night trading, but brokers point to the small turnover in yuan futures on the Hong Kong exchange and US rival CME as evidence that investors are more interested in other products.
Joseph Tong Tang, executive director of Sun Hung Kai Financial, welcomes more products, but does not see any immediate change of fortune for yuan currency contracts.
The night trading session from 5pm to 11pm, introduced in April, allows investors to trade standard futures contracts on the benchmark Hang Seng Index and the H-shares index. This would provide a total of 12 hours for trading, but is well short of CME's 23 hours.
A stock exchange spokesman said the bourse would hold an overall review into how to improve night trading and would consider more products such as yuan futures, mini-HSI futures and mini-H-shares futures.
However, Tang said: "I do not see there will be much difference to come from the exchange adding yuan futures for trading at night or not. Hong Kong investors are not interested in it. The mini-HSI or the mini-H-shares products look more attractive."
In August, the average daily number of yuan futures contracts traded was 392.
For CME's yuan/US dollar contracts - of similar value to the Hong Kong contracts, at about US$100,000 each - the average daily number traded was 36 in September. It was 45 in August. The US exchange's yuan/euro and yuan/yen contracts have failed to attract trading this year.
Christopher Cheung Wah-fung, legislator for the financial sector, said he preferred mini-index contracts to yuan futures. The two mini contracts of the HSI and H-shares index futures have a smaller contract value than the standard futures contract, making them popular with investors.
"Local retail investors prefer to trade stock index futures as they are more familiar with the stock market. The yuan futures are thinly traded in the daytime session and I do not see that they would be traded widely during the night session even if the exchange were to add this product," Cheung said.
Cheung said HKEx could consider US Dow Jones Index futures and extend the night session further to match the US close.