HONG KONG (MarketWatch) — China launched a new index Monday comprising some of the biggest listed companies on the mainland’s two stock exchanges, as well as those in Hong Kong and Taiwan, a landmark step that is expected to help lay the groundwork for the development of new financial products.
The index known as the CSI Cross-Straits 500, will track 300 component stocks listed on the mainland, 100 listed in Hong Kong and the largest 100 firms by market capitalization in Taipei, according to compiler China Securities Index Co., a joint venture between the Shanghai and Shenzhen stock exchanges.
The new index will “provide a basic instrument for the development of index-related investment products and derivatives,” it said in a statement posted on its Web site.
The combined market value of companies tracked is 32 trillion yuan ($4.7 trillion), or about or three-quarters of the four markets’ total capitalization, CSI said.
Analysts expect the index will boost trading volumes among the various markets, according to a Dow Jones Newswires report.
“Several domestic and foreign institutions are developing relevant investment product, providing investors with convenient financial tool for investing” in the Greater China market, CSI said.
Hong Kong brokerage UOB KayHian tipped Hong Kong stock market operator Hong Kong Exchange and Clearing as a likely beneficiary of the new index, the report said.
Taiwan limits mainland investment
Separately, Dow Jones Newswires said regulators in Taiwan are planning to cap investments by mainland China professional investors at approximately $500 million, or roughly half the level the regulator previously proposed to Taiwanese lawmakers.
The limit would affect investment inflows under the Qualified Domestic Institutional Investors (QDII) program, as part of the general agreement which came into effect Saturday, the report said.
Taiwan will also keep key industries — specifically, telecommunications, property and construction, broadcasting, airlines and air cargo — off-limits to investments under QDII, it said, adding that rules applying to investments in the financial sector have yet to be finalized.