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The Hong Kong Mercantile Exchange, which plans to launch yuan‐denominated gold and silver contracts next month, will help China improve its pricing power in the internationalcommodities market.
HKMEx chairman Barry Cheung Chun‐yuen yesterday said China's commodity market had been limited to domestic players and lacked foreign participation because of currency and regulatoryrestrictions.
That was why benchmark prices of almost all commodities were set by non‐Asian overseas exchanges, Cheung said. "HKMEx is ideally positioned to bring together commodity traders and investors from China and across the globe, thereby facilitating the internationalisation of China's commodities market," Cheung told Chinese commodity producers at a seminar held by HKMEx and the Commercial Bank of China in Beijing yesterday.
"I hope that in a short period of time, our gold contracts can be used as benchmark price for gold traders … gradually, the pricing power [for more commodities] can be moved from London or New York to China."
HKMEx plans to launch yuan‐denominated gold and silver future contracts next month. It will complete its precious metals offerings with platinum and palladium futures by year‐end. Contracts in base metals, energy, agricultural products and commodities are in the pipeline for next year.
The commodities bourse, which began operation in May, currently offers two contracts ‐ a 32 troy ounces gold futures contract and a 1,000 troy ounces silver futures contract. Cheung said the bourse had been operating smoothly, and he expected it to break even next year.
China has seen steady and robust growth in commodities demand. Commodities imports stood at around US$18.1 billion last year, representing a compounded annual growth rate of 16.3 per cent in the last 15 years.
"HKMEx plays a different role from the mainland bourses. We are targeting both mainland and international customers, and the products we offer are also different," said Cheung. "Instead of competing against each other, we have a lot of opportunities to work together."
Copyright: South China Morning Post
