FTSE China A50 index was launched in 2003 and it represents a benchmark for the equities markets in mainland China. The FTSE China A50 tracks the performance of the 50 largest A-shares, in terms of market capitalisation, which are incorporated and traded on the Shanghai and Shenzhen Stock Exchanges. The A-shares which are available for trading on the stock exchanges are listed in Chinese Yuan. Moreover, these securities are available to Chinese and international investors in accordance with the China Qualified Foreign Institutional Investors (QFII) Regulations) and Renminbi Qualified Foreign Institutional Investors (RQFII) Regulations).
The constituents of the China A50 are reviewed on a quarterly basis in March, June September and December. Based on the reviews the companies can be excluded or added to the index. A-shares included in the FTSE China A50 index show the performance of companies from different industries such as banking, real estate and holding, oil and gas and the automobile industry as well as others.
Because it tracks the performance of the top A-Shares in China equity market, the FTSE China A50 index serves as the basis for the creation of index-tracking funds and as an underlying for different types of derivative instruments.
As an index composed of stocks from an emerging economy, its price movements exhibit higher volatility compared to some indices from developed countries. The increased volatility is perceived as a positive characteristic by the traders because it can offer higher reward during short periods. If we look at the weekly price chart, it is evident that the index value leans towards movements within a wide range marked with some significant changes from tops to bottoms. So, there are significant price retracements and FTSE China A50 value can change by more than 20 per cent in some instances.
The increased volatility comes from the inclusion of a wide spectrum of industries, so the factors that can affect these industries may also affect the China A50 value. Changes in the value of some of the biggest constituents can also put pressure on the price as it is a float-adjusted market capitalisation index. In addition to the factors mentioned above, traders should also monitor for economic and non-economic events that might affect the stock markets (crisis, political instability, the outbreak of a pandemic, etc.).
Although the developments of Chinese economies have given plenty of opportunities for investors and traders, it should be noted that not everybody can make profits from FTSE China A50 price movements. The reason is that there is a strict regulatory framework which limits the investment opportunities for international investors. However, there are different alternatives to indirectly benefit from the value movements of China A50.
Traders can purchase ETFs or futures and options. These instruments have their own drawbacks which can complicate the trading process and increase the costs of opening and closing positions.
cryptocurrencieshub.com platform has created an innovative way for traders to benefit from the movement in the index value. The company creates tokens for real-life tradable assets, called tokenised assets or tokenised instruments. Trading tokenised assets enables you to profit from the price movements without actually owning the assets.
Also, cryptocurrencieshub.com platform offers a solution to a major drawback faced by owners of cryptocurrencies. More precisely, when trading on cryptocurrencieshub.com platform, you can open positions with crypto or with fiat currency. You are no longer forced to exchange your cryptocurrencies to trade China A50. So, you can now use your Bitcoin or Ethereum to trade China A50 or any other assets or commodity on cryptocurrencieshub.com.
Trading on margin is yet another benefit offered by this trading platform. You have the opportunity to boost your earnings made from each profitable transaction because FTSE China A50 trading is executed with a leverage of up to 1:100 or stated otherwise, you will open positions with a margin of 1 per cent. Ultimately this means that you can take a long or short position with tokenised China A50 index worth, let’s say £25,000, with only £250 or 1 per cent of your capital. The best part of margin trading is that you will make profits based on a position of £25,000, hence an increase of 2 per cent on a long position could bring you £500 gain.
Tokenised FTSE China A50 trading is executed through the following steps:
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