China's Stock Index Futures Fail to Hedge Effectively, Urgent Market Changes Needed.
The study looked at how well China's stock index futures can protect against losses in certain stocks. They found that using futures with the top warehouse stocks didn't work well, and using futures with randomly selected stocks did even worse. The researchers suggest that China should introduce new futures contracts based on different types of stocks to improve hedging options. They also tested a virtual futures contract for small and medium-sized enterprises (SMEs) and found it could be a good idea to put into practice.