Mainland launches stock option trading

 

 

 

Shanghai Party Secretary Han Zheng and China Securities Regulatory Commission Chairman

Xiao Gang opened the market for the option trading at the Shanghai Stock Exchange.  

Photos – Internet

 

 

 

SHANGHAI  |   2015-02-09 23:11:44

 

Mainland launches

stock option trading

 

By Zhang Yi and Pan Qing

 

 

The Chinese mainland launched its first stock options on Monday of February 9, giving investors more tools to manage risks as the country’s stock market showed signs of losing steam after gaining 53 percent last year.

Shanghai Party Secretary Han Zheng and China Securities Regulatory Commission Chairman Xiao Gang opened the market for the option trading at the Shanghai Stock Exchange.

The first day’s trading involved transactions on about 18,800 contracts. Premium trade volume reached 29 million yuan (4.4 million U.S. dollars), according to statistics from the Shanghai Stock Exchange.

“We hope the introduction of stock options will provide domestic investors diverse choices, promote product innovation and enrich trading strategies,” said Huang Hongyuan, general manager of the Shanghai Stock Exchange.

Huang said he expected the stock option would better reflect market sentiments and increase pricing efficiency.

Option trading could accommodate the needs of insurance companies and pension funds, improving the structure of funds in the market, he added.

The Shanghai Stock Exchange requires individual investors to have at least 500,000 yuan in their accounts to trade options, while institution investors must hold at least one million yuan.

The benchmark Shanghai Composite Index rose 0.62 percent to end at 3,095.12 points as the stock option 50 ETF was introduced.

The Shanghai Composite Index, the world’s best performer in the last year, sagged in most trading days in the past two weeks because of pressures from tightened stock financing and waves of initial public offerings (IPOs).

Chen Dongwei, an analyst with CITIC Securities, said the introduction of the derivatives had given steam to banking, insurance and securities traders.

Western Securities Co. Ltd. increased 10.02 percent to close at 32.07 yuan per share, while China Minsheng Banking Corp. Ltd. rose 1.87 percent to end at 9.24 yuan.

“The risk-control tool will help improve stock market liquidity and boost investor confidence,” said Qiu Yanying, chief analyst at V. Stone, a private fund.

The Shumi Fund Research Center wrote in a note that the option would have little impact in the near term, but in the medium and long term, the option trading would develop more products and make “potential and gradual influences” on the valuations of blue chips.

Chinese regulators have been trying to help individual investors better manage their risks by building a comprehensive derivative system. China introduced stock index futures in 2010 for investors to bet on future price movements.

The Shanghai Stock Exchange will expand the scope of assets that the options can be bet on as it develops comprehensive arrangements of security deposits, according to a report from the exchange.

 

 

 

 

 

 

BEIJING  |  2015-02-09 17:04:30

 

Chinese shares pick up

over stock option launch

 

By Zhang Zhongkai and Zhao Xiaohui

 

 

Chinese stocks closed higher on Monday after the launch of the country’s first stock option.

The benchmark Shanghai Composite Index rose 0.62 percent to end at 3,095.12 points, while the Shenzhen Component Index gained 0.71 percent to end at 10,868.14 points.

Total turnover on the two bourses shrank to 436.14 billion yuan (71.17 billion U.S. dollars), the lowest within three months.

China’s first stock option, the 50 ETF, was launched on the Shanghai Stocks Exchange on Monday, marking the introduction of a new risk-management tool to the country’s growing financial derivatives.

Analyst with CITIC Securities, Chen Dongwei, said the move had given steam to banking, insurance and securities traders. Western Securities Co. Ltd. increased 10.02 percent to close at 32.07 yuan per share, while China Minsheng Banking Corp. Ltd. rose 1.87 percent to end at 9.24 yuan.

Meanwhile, stocks related to liquor, food and beverages also gained with the week-long Chinese New Year celebration just around the corner.

The sports-related sector was among the day’s biggest losers. Guirenniao Co. Ltd., a Chinese sports attire producer, lost 10 percent to end at 22.32.

Chen advised caution in future trading, citing factors such as the upcoming Spring Festival holiday, when liquidity will likely be tight, and a new batch of initial public offerings (IPOs) this week.

The ChiNext Index, China’s Nasdaq-style board of growth enterprises, lost 1.28 percent to end at 1,708.85 points.

 

 

 

 

 

 

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