Trade the FTSE China A50 Online

Trade the China A50 with an ASIC Regulated Broker

Test your trading skills on the Chinese market via our CN50 CFD. Access some of the tightest spreads in the industry, with lightning quick trade execution and an unrestricted trading environment across forex, oil, gold, silver and stock market index markets.

A Primer on the China A50

The China A50 index is owned by the FTSE group, and provides qualified investors the ability to trade a group of 50 forms incorporated in mainland China.

  • Represents 50 A-shares
  • A tradeable index
  • Free-float adjusted market capitalisation weighted
Read More

Represents 50 A-shares
The ‘A’ in A50 means that the companies are domestic (incorporated in China) and therefor traded in Renminbi (CNH). Stocks are selected from the Shanghai Stock Exchange and Shenzhen Stock Exchange and ‘liquidity screened’ to make sure the index continues to represent the underlying market.

A Tradeable Index
The FTSE China A50 is a tradable instrument. This is unlike the majority of modern stock market indices, as usually the index cannot be directly traded. However, the China A50 it is mostly shut to outside investors as a trader either needs to be Chinese, or a qualified institutional investor the QFII & RQFII regulation.

Therefore, to speculate on the China A50 the majority of investors must use a derivative or ETF.

A Free-Float Adjusted Market Capitalisation Index
To weight the index the China A50 uses a free-float market-cap approach. ‘Free-float’ means it excludes shares of the company which are held by insiders or governments, so only publicly available shares are used in the calculation. And market-cap means that equities with a larger market capitalisation carries a greater weight to the index than lower market-cap stocks.

How Can You Trade the FTSE China A50 Index?

Whilst the index is directly tradable to mainland Chinese residents and select institutional investors, everyone else must rely on derivate markets or ETF’s to trade the China A50 from overseas.

FXTRADING.com offer CFDs (contracts for difference) which are a form of derivative open to traders of all levels and location. Our clients are free to trade our CN50 CFD as a proxy to the China A50 index.

The main advantages of CFDs are that they allows a trader to place bullish and bearish bets, enabling them to participate in rising and falling markets. Yet CFDs do not lock a trader into a contract or become the owner of the underlying market. Moreover, with leverage available of up to 100:1, margin requirements (collateral) remain very low, which makes index trading the more accessible to traders of all levels.

Read More

Long example: China A50 (CN50 CFD)
A trader buys 1 contract of the CN50 CFD at 15,270 (priced in USD)

  • If the price rises to 16,300 the trader could exit for a profit around US $1,030
    • (# contracts x contract size) x (exit price – entry)
    • (1 x 1) x (16,300 – 15,270)
  • If the price falls to 14,700 the trader could exit for a loss around US -$570
    • (# contracts x contract size) x (exit price – entry)
    • (1 x 1) x (14,700 – 15,270)
  • A 1% margin requirement with 100:1 leverage requires US $152.70 of capital
    • (# contracts x contract size x price) / leverage
    • (1 x 1 x 15,270) / 100

 

Short example: China A50 (CN50 CFD)
A trader sells 10 contracts of the CN50 CFD at 13,200 (priced in USD)

  • If the index falls to 12,500 the trader could exit for a profit around US $7,000
    • (# contracts x contract size) x (entry – exit price)
    • (10 x 1) x (13,200 – 12,500)
  • If the index rises to 13,500 the trader could exit for a loss of around US -$3,000
    • (# contracts x contract size) x (entry – exit price)
    • (10 x 1) x (13,200 – 13,500)
  • A 1% margin requirement with 100:1 leverage requires US $1,320 of capital
    • (# contracts x contract size x price) / leverage
    • (10 x 1 x 13,200) / 100

 

Costs associated With CFDs

Spread:
FXTRADING.com offer tight spreads, which is a nominal transaction cost charged at the point of trade entry. The spread is the difference between bid and ask prices (bid – ask) which are visible within MT4 on the deal ticket or ‘market watch’ window. With the correct settings within MT4 the real-time spread can also be viewed on the chart.

As the width of the spread is dictated by the level of liquidity available, we would typically expect to see a tighter (cheaper) spread during periods of higher trading activity, such as when the underlying market exchange is open.

As liquidity tends to dry up ahead of an economic news release, spreads can widen temporarily until liquidity returns following the news.

In this example, the spread is 1 index point (equivalent to USD $3.00).

CN50
Bid / Ask:
15,300.00 / 15,303.00

In the next example, the spread is 2.5 index points (equivalent to USD $5.00).

CN50
Bid / Ask:
15,303.00 / 15,308.00

Swaps:
For positions held overnight (midnight server time) a swap is applied. Swaps can either be a debit or a credit to the floating P&L, depending on what the underlying interbank rate is and whether the trade is log or short.

Swaps for the CN50 are calculated in USD as this is the currency it is traded in, although the interbank rate for Chia is used for the basis of its calculation.

As swaps are calculated 365 days per year yet market are closed over the weekend and public holidays, Friday’s are a ‘triple swap’ day for the CN50 CFD.

Market Drivers for the China A50

  • People’s Bank of China (PBOC)
  • Policy Makers
  • Plunge Protection team
  • Domestic retail traders
  • Global Equities
  • Economic data
  • Risk-appetite
Read More

People’s Bank of China (PBOC)
Central banks hold a lot of power over markets and can make or break trends through a change of monetary policy. Tools typically used by central banks include raising or lowering interest rates, increasing or decreasing liquidity to the financial markets and (more recently) quantitative easing (QE).

The PBOC are the central bank for China and their actions not only control their domestic markets but can also establish sentiment across the globe. If they are seen to be adding liquidity it can boost asset prices such as the China A50, but also other risk assets such as the S&P500, DAX, AUD/USD and NZD/USD.

Whilst central banks such as the Fed or ECB focus on the interbank rate, PBOC have several rates they change to influence market behaviour such as the LPR (one-year loan prime rate), 7-day reverse repo and the RRR (reserve requirement ratio).
The Government
The Chinese government set out to achieve levels of growth far higher than that seen in the Western world, and typically manage to grow their economy around 6% YoY. Stimulus from the government aims to keep it around this level which has been achieved via tax cuts and large-scale infrastructure projects. If traders hear the government are about to add stimulus, markets flip to risk-on and send risk-assets such as indices, high-yielding currencies and bond yields higher. If government stimulus is coupled with PBOC stimulus, risk-on sentiment receives a greater boost.

National Team / Plunge Protection team
In times of market turmoil, the Chinese government have been known to influence the stock market to provide a floor via what is knows as the ‘national team’. These are said to be a group of government-backed institutional investors which effectively become buyers of last resort and buy stocks. And if the market suspects this is the case, it adds fuel to the rally and can send stocks higher. Taking this a step further, stocks have been known to rally simply because investors suspect the National Team will step in, so stocks rally without the need for them to intervene. For this, economic data ha to be particularly bad.

Domestic Retail Traders
This is not usually a segment we’d expect to place as a market driver for an index but, for Chinese markets, this subset of investors carry clout. In 2015 it was estimated that around 30% of Chinese students held shares with average portfolio of around ¥50,000. It is quite normal for the Chinese general public to be invested in the stock market, and this partly explains some of the strong moves we see when stocks rally and can seemingly trade higher exponentially.

Global Equities
Equity markets across the globe can go through periods of time with strong correlations. If global sentiment leans predominantly towards risk-on or risk-off, and no domestic factors overshadow this, then indices tend to track one another. This means traders keep an eye on how indices from the prior session have performed as it can provide a lead in the current session. For example, traders of the European session would look to see how Asian markets performed, US-session traders would see how European indices performed and Asia-session traders would see how US markets performed.

Economic Data
As central bans and governments use economic data to assess which policies to implement, traders follow economic data to try and predict how they will act. For equity and index traders, growth and its potential is an important factor to determine how market prices will perform. Share markets tend to benefit from an economic expansion and weaken during period of economic contraction.

Leading indicators such as business surveys (PMI), consumer surveys (consumer confidence) can provide larger reactions as they aim to predict potential growth. If PMI’s contract, it can negatively impact equity performance. However, if the data is too bad, traders might then assume central bank of government intervention and send equities higher.

Risk-Appetite
Sentiment is an important factor to determine for all markets. Risk-on tends to see investors inherit greater risk and buy assets such as equities, indices and high yielding currencies. Safe-haven assets such as gold and silver tend to underperform during periods of risk-on.

Why Trade the China A50?

  • Trade long and short
  • Access a market typically closed to foreign investors
  • Low margin requirements
  • Trade a directional view on the Chinese economy
  • Can be used as a proxy for risk
Read More

Trade Long and Short
Markets do not move in one direction.  It then makes sense for traders to keep their options open and seek tradable opportunities in both rising and falling markets. CFDs allow this as traders can initiate bullish and bearish bets from without our MT4 platform.

Access a Market Typically Closed to Foreign Investors
The underlying index is only directly tradeable by mainland Chinese and qualified institutional investors. Our CFD offering gets around that limitation and provides traders across the globe access to live prices for the China A50 CFD (CN50).

Low Margin Requirements
With 100:1 leverage available for our clients margin requirements are kept to a minimum. This also means that a trade can be opened with 100th of the capital required to buy the entire index. In turn, this can keep traders further away from a margin call or allow a portfolio manager the ability to increase market exposure if trading a portfolio with multiple markets.

Trade a directional view on the Chinese economy
Whilst global indices can spend large part of their time with a positive correlation, there will always be outperformers and underperformers among them. It then makes sense for traders and investors to try and single out which markets they think will outperform or underperform. If a fundamental trader is bullish on China, they can express this view with our CN50 CFD. If a technical trader has identified strong momentum on the China A50 (bullish or bearish) then they have access to trade this market long or short.

The China A50 Can Be Used as a Proxy for Risk
As indices tend to perform well during bouts of risk-on, they remain an instrument which all traders should keep on their watchlist.  And with the ability for the PBOC, Chinese government or their ‘national team’ to boost sentiment, the China A50 is an ideal instrument to consider trading risk-sentiment.

Why Trade the China A50 with FXTRADING.com?

  • Competitive Spreads
  • Hedging allowed
  • Trade the China A50 around the clock
  • Unrestricted trading environment
  • Multiple Deposit Options
Read More

Competitive Spreads
FXTADING.com offer soe of the tightest spreads in the industry. We have access to top-tier liquidity providers and deep pools of liquidity.   

Hedging allowed
As FIFO rules (first in, first out) do not apply, traders can open multiple positions in opposite direction with the same instrument. This means traders can hedge their current position if they want to mitigate risk over a volatile period. And if a long and short position of equal size are opened on the same index, it removes the margin requirement which free up equity to seek additional opportunities.

Trade the China A50 Index Around the Clock
Our CN50 CFD allows traders to speculate on the China A50 market for over 18 hours per day, 5 days per week. This opens-up opportunities for traders across the globe to speculate on China’s market, even when the underlying stock market index is closed.

Unrestricted Trading Environment
Our trading environment welcomes all styles of traders, whether they be scalpers, high-frequency or EA (automated) traders.

Multiple Deposit Options
We are a global company ad with that is the requirement to accept multiple currencies via popular payment methods such as Neteller, Skrill, Poli and bank transfer or wire.

  • Simply Fill In Your Details Below To Receive Your Trading Platform