The recent development of the Chinese equity markets has been spectacular. Shanghai Composite Index hit 7-year highs (increased 170% from the lowest point in 2008), and the total value created over the past 12 months reached US$6.5 trillion. All of these were triggered by the new policies of Chinese government to divert capital flow into the stock markets in Shanghai and Hong Kong (the Shanghai-Hong Kong Connect). The new investment channel is being fueled by the huge reserves of capital laid in the hands of both retail and institutional investors.
In terms of investment in the futures market, most individuals in China could only be spectators. The fact is the entry requirement to the futures game is just too high for most individuals. To cater for this vast majority of investors, 796 launches “Xinhua A50 Index Futures” offering minimum investment as low as 150 CNY (around 25 USD). Nelson Yu, representative of 796 in US says,
“As in many traditional investment instruments, the minimal capital to invest in Index based futures products is rather high for novice investors in China. You need to shell out as much as tens of thousands to get something going with your broker. Let alone the complicated processes you need to go through and the high fees you need to pay for either profit or loss. Investors in China have very limited choices unless we break down the high requirements and transact the products in a few clicks.”
Investors can either place orders with bitcoins or RMB on the platform. P2P lending and leverage are also available for qualified customers. Once the capital enters the 796 platform, investors can choose between products with crypto or RMB underlying. Nelson added,
“The blockchain technology gives investors efficiency and freedom to grow their asset. We also believe the crypto and fiat investment realms will eventually merge seamlessly to become a unified platform. 796 was the first in Bitcoin futures and is now the first again in Equity Index-based futures. We will continue to innovate to provide an integrated investment platform for investors.”
Beta paper trading has commenced on Jun 10 through 18 for Chinese nationals only. Ten bitcoins were deposited in the participant’s 796 account to start simulate trades. The product is scheduled to go live shortly after beta.
796 Cryptocurrency Futures Platform has been instrumental in shaping the development of Bitcoin and Litecoin futures markets in China. They had been leading the market with many innovative crypto derivatives. Now, 796 Exchange is launching more new products to “liberate” investors from the non-crypto arena. For example, a Bitcoin-Equity P2P lending product went live just back in May, enabling investors to collateralize their bitcoins for buying Chinese stocks.
More rumors are going around in China about opening another floodgate between the Shenzhen and Hong Kong stock market to continue the boost. QDII2 has just been announced in May to start trials in 6 cities in China. (
http://www.cnbc.com/id/102708675). It is hard not to see the central government’s determination to make China a freer market. With all that said, all bubbles inevitably burst. Doomed will be most investors but the shrewd ones with the foresight to put eggs in 2 baskets. Bitcoin still seems to be one nice and open basket.
