HKEx rolls ‘world’s first’ gaming index futures product

May 10, 2016 Newsdesk Industry Talk, Latest News, Macau, Rest of Asia  

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Hong Kong Exchanges and Clearing Ltd – the operator of the Hong Kong Stock Exchange – on Monday introduced a futures investment product associated with a stock index featuring shares of Hong Kong-listed gaming firms.

The underlying index for the futures product is the CES Gaming Top 10 Index. Launched last month, the index includes several companies operating in Macau, but also offers exposure to Cambodia’s casino sector and to lotteries in mainland China.

“The gaming index futures will be the world’s first futures [product] on that sector,” Hong Kong Exchanges and Clearing said in a statement.

“Our sector index futures will give investors a low cost and capital efficient way to gain exposure to large stocks from a key sector of our securities market,” Li Gang, the firm’s co-head of market development, said in a statement.

A futures contract – known colloquially as ‘futures’ – is a standardised forward contract that can be easily negotiated at a futures exchange. The parties initially agree to buy and sell an asset for a price agreed upon today (the forward price) with delivery and payment occurring at a future point, the delivery date.

An index futures contract binds the parties to an agreed value for the underlying index at a specified future date.

Stock index futures are used by investors for hedging, trading and investment purposes in selected portfolios of shares. Investing via the use of stock index futures offers exposure to a market or sector without having actually to purchase shares directly.

China Exchanges Services Co Ltd is in charge of the CES Gaming Top 10 Index. The gauge is designed to track the performance of the 10 largest gaming stocks listed in Hong Kong as ranked by average market capitalisation over the previous 12 months.

The stocks included in the index are: Galaxy Entertainment Group Ltd; Sands China Ltd; SJM Holdings Ltd; MGM China Holdings Ltd; Wynn Macau Ltd; Melco International Development Ltd; NagaCorp Ltd; Macau Legend Development Ltd; China LotSynergy Holdings Ltd; and China Star Entertainment Ltd.

The index composition is reviewed every six months, according to China Exchanges Services.

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