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China to launch stock index future on April 16

Reports WSJ:

China said it will introduce stock-index futures April 16, ending years of preparations that signaled policy indecision over the financial derivatives designed for risk-hedging, but also seen as vulnerable to speculative forces.

The announcement by the China Financial Futures Exchange, which will host the index futures, will give investors a means to bet on the direction of major share indexes and also allow them to make money when the market falls. It is expected to boost demand for index heavyweights such as major blue chips when trading resumes Monday.

Investors have eagerly anticipated the launch, which will expand options in a market where, up to now, being bullish has been the only choice because there has been little to shield investors in the face of a sharp decline. However, Chinese investors’ lack of experience in dealing with risky investment tools such as margin trading and short selling, and the country’s perilous experience with futures trading, form a big question mark over the index futures’ ultimate fate.

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