Bloomberg News Writes:
Option wagers on Hong Kong stocks rose to the highest level this year as regulators? silence over the timing of an exchange link with Shanghai prompted traders to prepare for rising volatility.
The number of outstanding contracts on the Hang Seng Index climbed to 337,540 yesterday, the most since December 2013, while trading of puts and calls on Hong Kong Exchanges & Clearing Ltd. (388) was 54 percent higher than this month?s average. The equity gauge sank 0.7 percent after HKEx Chief Executive Officer Charles Li said regulators haven?t signed off on the link and he has no idea when it will begin. Brokers were expecting to make their first cross-border trades this month.
Confusion over the start date threatens to increase swings in Hong Kong?s $3.6 trillion equity market, which is already grappling with reduced Federal Reserve stimulus and pro-democracy protests in the city?s central business district. The Hang Seng Index posted some of its biggest moves of the past decade after a 2007 plan to let mainland investors buy Hong Kong shares was delayed and then eventually abandoned.
?If there is no clarity, there will be volatility as the market cannot price in expectations properly,? said Hao Hong, the chief China equity strategist at Bocom International Holdings Co. in Hong Kong.
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