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The Hong Kong Mercantile Exchange (HKMEx) started with a bang yesterday as it traded more US dollar-denominated gold futures than gold products traded on the local stock and futures markets, but failed to match the turnover of the local gold bourse.
HKMEx, which finally took off after more than two years of delays, recorded a turnover of US$187.7 million, with 3,929 contracts changing hands at the end of trading at 11pm.
HKMEx's turnover was higher than that of Hong Kong Exchanges and Clearing (HKEx), which traded 90 gold contracts at US$13.44 million. HKEx has two listed gold exchange-traded funds (ETFs), which saw a combined turnover of HK$17.57 million, and 16 gold warrants, which registered a total turnover of HK$225,280 on the day.
HKMEx could not beat the 100-year-old traditional Chinese Gold and Silver Exchange Society, which traded 917,700 ounce of spot gold, valued at US$1.369, billion as of 5pm.
Ben Kwong Man-bun, chief operating officer of KGI Asia, said investors might want to wait to see how HKMEx shapes up before trading on the new platform.
"It is good to see a new exchange as it provides a new platform for customers in Hong Kong and Asia to trade gold and other commodities products," Kwong added.
KGI Asia is a member of both HKEx and HKMEx.
The HKMEx, which took HK$500 million and three years to come on stream, was first announced by chairman Barry Cheung Chun-yuen in June 2008. It was scheduled to start trading in mid 2009 but got the approval of the Securities and Futures Commission only in late April.
It trades US dollar-denominated gold products and plans to expand to yuan-denominated gold products by the end of this year.
The HKMEx debuts amid unprecedented gold prices. Spot gold was in the US$1,490 region yesterday.
Investors can pay a minimum deposit of US$1,600 to one of the 18 broker members and trade future contracts via an electronic system.
Cheung said the launch of HKMEx was "a milestone in the Asian commodity industry. It also strengthens Hong Kong's status as an international financial centre".
"We're very pleased with our trading volumes so far," Cheung said. "It clearly shows there is indeed a demand for a gold futures contracts with physical delivery, and designed with Asian needs in mind."
Albert Helmig, president of HKMEx, said he wanted it to become the "world's gateway for commodities trading with China".
The exchange charges an annual fee from members and trading and clearing fees.
Copyright: South China Morning Post
