China regulator warns of risks in stock futures

Educating investors about risk remains the biggest obstacle to the launch of financial futures in China, the securities regulator said on Wednesday.

Technical preparations for the launch of stock index futures were completed last year, but Shang Fulin, head of the China Securities Regulatory Commission, said he was wary of the risks involved, especially for individual investors.

Shang said the first CSRC chairman, Liu Hongru, had relayed to him the advice of a prominent Hong Konger: "If you really hate somebody, please ask his son to speculate in futures."

He was speaking to reporters on the sidelines of the National People's Congress, China's legislature, which heard from Premier Wen Jiabao on Wednesday that his government would steadily develop the futures market.

Shang said the rules for a long-planned board for growth enterprises on the Shenzhen stock exchange would be published after the congress, which is due to last two weeks.

He also said the CSRC was actively preparing for red chips, mainland companies incorporated outside China and listed in Hong Kong, to sell shares in the domestic A-share market.

The subprime crisis was having only a limited impact on A-shares, but the commission was keeping a close eye on developments, Shang added.

He said relevant government departments were still studying the details of a delayed scheme, first proposed last August, that would allow Chinese residents to invest directly in Hong Kong shares.