Hong Kong Exchanges & Clearing Ltd. (BNWEXCH), Asia’s biggest exchange company by value, agreed a joint venture to develop index-linked and equity derivative products with its mainland Chinese counterparts.

The venture with the Shanghai and Shenzhen stock exchanges will develop cross-border indexes and products based upon them, according to a statement from Hong Kong Exchanges today. The partners will each invest HK$100 million ($12.89 million) in the new company, to be established within three months of today’s signing of the agreement. The announcement comes before China’s President Hu Jintao visits Hong Kong for this weekend’s 15th anniversary of the city’s return to Chinese rule.

Hong Kong Exchanges is trying to expand its business by offering yuan-denominated and China-linked products as the pipeline of big initial public offerings from the world’s second-largest economy slows. The exchange said this month it has agreed to pay 1.39 billion pounds ($2.16 billion) for the London Metal Exchange, which handles more than 80 percent of global trade in futures for industrial metals, of which China is the No. 1 consumer.

To contact the reporter on this story: Hwee Ann Tan in Hong Kong at hatan@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net