China's stock-index futures rise on first trading day

The four contracts based on the CSI 300 Index, which tracks the 300 biggest stocks on the Shanghai and Shenzhen stock, all advanced at the close. The CSI 300 and the Shanghai Composite Index both fell 1.1 percent.

“Major players are still very cautious about index futures and haven't entered the market yet,” said Larry Wan, deputy chief investment officer at KBC-Goldstate Fund Management Co., which oversees about US$583 million.

Chinese stocks extended yearly declines Friday on concern the government will boost interest rates to curb loan growth and soaring property prices. The nation's equities may rebound in the second half as the government eases its measures and allows the yuan to appreciate, HSBC Jintrust Fund Management Co. said. The introduction of stock-index futures is part of China's push to provide more options for investors and ease fluctuations after the Shanghai Composite slumped the most among major global markets this year following an 80 percent rally in 2009.

The futures will allow investors to hedge risks from potential asset bubbles and make equities cheaper in the long- term, according to Macquarie Group Ltd., Australia's largest investment bank.

“It will help tame asset bubbles over time,” Michael Kurtz, head of China research at Macquarie Group, said in an interview in Shanghai.

The Shanghai Composite trades at a historical price-to- earnings ratio of 35.7 times, compared with the current valuation of 27.6 times, according to weekly data compiled by Bloomberg. The Hang Seng China Enterprises Index, which comprises mainland companies trading in Hong Kong, is valued at 17.5 times earnings.

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