Index futures expected to draw strong response from fund managers

China will start trading its first listed index futures contract today on the China Financial Futures Exchange in Shanghai, and traders expect strong interest from fund managers on the mainland.

The CSI 300 Index covers the 300 most liquid stocks listed on the Shenzhen and the Shanghai stock exchanges.

Tang Hing-sing, managing director of Bank of China International-Prudential Asset Management, said he expected mutual fund managers in China to use the new index futures product.

'We have spoken to a few larger fund managers on the mainland,' Tang said. 'I think they are very interested. We can see new types of fund launches that can use the new index futures.'

Futures, a type of derivative contract, can be used to short sell stocks or indices.

Apart from hedging, Tang said such contracts were useful for creating investment products that offer an alternative to so-called long-only funds, which only go long on stocks.

He said the introduction of index futures would add depth to the A-share market.