Cap­i­tal­iz­ing on China’s gold rush

China Daily (Canada) - - FRONT PAGE - By WU YIYAO in Shang­hai


Yvonne Zhang, di­rec­tor of Met­als Prod­ucts for Asia at the Chicago-based CME Group, has been a very busy woman of late, hav­ing to city-hop in China dur­ing week­ends and hol­i­days to at­tend nu­mer­ous sem­i­nars with gold in­vestors.

Zhang’s fre­quent trav­els are part of CME Group’s ef­forts to ex­pand its pre­cious met­als busi­ness in China, home to a boom­ing gold mar­ket. One of the rea­sons for this growth, said Zhang, is that China’s gold in­vestors have been very proac­tive in ex­pand­ing their knowl­edge of trad­ing rules, with many even hon­ing their in­vest­ment skills at sim­u­la­tion trad­ing ses­sions.

“China’s in­vestors don’t just have a big ap­petite — they are also quite skill­ful. In­vestors here have a long tra­di­tion of trad­ing gold and keep­ing them as a part of their in­vest­ment port­fo­lio, thus we are not here to ed­u­cate them how to trade, but to hear what they need,” Zhang said.

Ever since Chi­nese aun­ties pushed up gold prices with a buy­ing frenzy in 2013, emerg­ing in­sti­tu­tional and in­di­vid­ual in­vestors in the coun­try have been eye­ing the ben­e­fits of an in­creas­ingly open China mar­ket that of­fers more choices, noted Har­riet Hunnable, ex­ec­u­tive di­rec­tor of Met­als Prod­ucts at CME Group.

“Chi­nese in­vestors, es­pe­cially in­sti­tu­tional in­vestors, have been play­ing in­creas­ingly sig­nif­i­cant roles in the mar­ket. In­di­vid­ual in­vestors are also hav­ing mount­ing de­mands for in­vest­ing in gold as a risk-hedg­ing tool,” said Hunnable dur­ing a visit to Shang­hai to at­tend a fo­rum that dis­cussed op­por­tu­ni­ties and global co­op­er­a­tion in the Chi­nese gold mar­ket.

Hunnable also pointed out that her com­pany’s Gold Kilo Fu­tures con­tracts phys­i­cally de­liv­ered in Hong Kong, which was launched Jan­uary this year, has been quite pop­u­lar among in­vestors in China — the world’s largest con­sumer and pro­ducer of gold — and the Far East re­gion. The con­tract, which pro­vides clients ac­cess to

ex­ec­u­tive di­rec­tor of Met­als Prod­ucts at CME Group

round-the-clock price dis­cov­ery for the Asian gold mar­ket, is a sup­ple­ment to the ex­ist­ing cat­e­gories as de­mand for gold grows rapidly in China and the Far East mar­kets.

Plans to co­op­er­ate with Chi­nese in­sti­tu­tions are also un­der­way at CME Group. Shen Gang, the deputy gen­eral man­ager of the Shang­hai Gold Ex­change (SGE) said that talks have taken place be­tween the two par­ties re­gard­ing the list­ing of SGE’s gold-backed prod­ucts in the US de­riv­a­tives mar­ket­place. If an agree­ment is reached, SGE mem­bers will also be able to trade CMElisted prod­ucts in Shang­hai and vice versa.

SGE head Xu Luode com­mented that the ex­change has had more part­ner­ships with global mar­ket play­ers since the Chi­nese mar­ket started to open up and that China has in re­cent years been look­ing to in­crease its in­flu­ence in the pric­ing of gold. The planned launch of a ren­minbi- de­nom­i­nated gold fix — which will of­fer another op­tion to mar­ket play­ers and be com­ple­men­tary to the cur­rent dol­lar­de­nom­i­nated price — via the Shang­hai Gold Ex­change by the end of this year, looks to be one way to achiev­ing that goal.

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