Demand in Hong Kong for a recently introduced derivative product, callable bull bear contracts, has surged since their launch in June, with their average daily turnover growing ninefold.
The contracts, which track the performance of underlying stocks on which they are written, allow investors to bet on either upside or downside price movements in the underlying assets.
Average daily turnover for the derivative jumped to HK$128 million for the first three weeks of this month from HK$13.6 million in June, Reuters data shows.
Brokers believe the contracts will prove increasingly popular among retail investors as they are similar to warrants but simpler because the value does not change as much in relation to the underlying stock movements.
Derivative warrants allow the holder to buy or sell a specific amount of equities or other financial instruments from an issuer at a set price and time.
'Many investors still do not fully understand [the contracts],' said Johnny Yu, the director of equity risk management with UBS Securities Asia, the biggest issuer of the product by turnover in Hong Kong. 'But their turnover is likely to grow at a steady pace once investors become more familiar with them.'