Traders note that China’s major future contracts, in particular the CSI300 contract maturing on Friday afternoon, are pricing at a discount to current market levels, which implies those investors will need to pull down the index further or face losses.Īnd none of the futures contracts, which go as far forward as December, are pricing the CSI300 index close to where it would be if the Shanghai Composite Index, which shares many component stocks with the CSI300, recovered to 4,500 points, which is seen as the target level for when government intervention will cease. They are also closely watched by investors as an indicator of sentiment, and that has become a major problem for Beijing this week. Index futures, established in China in 2010, give investors a way to hedge risk, and also provide short-sellers another way to make money in a falling market.
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