It has taken quite a while but they have finally arrived. The Hong Kong stock exchange will launch index futures for A shares listed on the mainland markets. The first A-shares index futures contract, scheduled to start in October, will offer a significant new risk management tool that is easy to use for professionals and punters alike. As the Stock Connect trading platform between the city, Shenzhen and Shanghai has greatly facilitated cross-border transactions in recent years, traders increasingly need to hedge their risks, especially for global investors who participate in the mainland markets via trading through Hong Kong. The futures will be based on the popular MSCI China A 50 Connect Index. As the Stock Connect now handles about HK$5 billion a day in cross-border transactions, futures betting on the underlying yuan-denominated stocks will likely prove to be extremely popular. To provide extra ease, the local exchange will also allow a US dollar futures contract based on the same MSCI index. In the perennial financial contest between Hong Kong and Singapore, the new scheme will help the city to steal a march. The Singapore Exchange has stopped hosting more than two dozen futures products since February last year after ending a 23-year relationship with MSCI. The Lion City, though, still has A-shares index futures that track the FTSE China Index. Hong Kong stocks retreat as tech surrenders gains before earnings reports Meanwhile, the former head of the Hong Kong Monetary Authority has come up with an intriguing proposal. Speaking at a financial briefing with senior Beijing officials, Joseph Yam Chi-kwong said investors trading the constituent stocks in the Hang Seng Index should be able to do it in yuan. That would be “a giant step”, he said, in promoting the international use of the yuan and cementing the importance of the city as the nation’s key offshore centre for the Chinese currency. Both ideas align with goals laid down in the latest national five-year plan. As Hong Kong is home to the largest pool of offshore yuan deposits, it is in the best position to offer tailor-made renminbi products for global markets. Maintaining the city as a premier global financial hub is very much a key goal of the 14th five-year plan. The latest developments augur well for Hong Kong’s role and will further integrate the two sides. Its financial future is well assured.