Author: Chief China Economist's Office, Hong Kong Exchanges and Clearing Limited
REPORT SUMMARY
As a global financial centre, Hong Kong has achieved remarkable performances in many areas of the financial sector. However, the development in the commodities market in Hong Kong is relatively weak and currently sits behind other commodity trading hubs such as New York and London. One of the key elements of a successful commodity trading hub is the easy access to commodity exchanges and a wide range of price discovery and hedging solutions.
The only self-regulated spot commodities market in Hong Kong is operated by the Chinese Gold & Silver Exchange Society (CGSE). It provides platforms, facilities and related services for its members to trade gold and silver. Alongside, the only regulated commodity derivatives market is operated by the Hong Kong Futures Exchange (HKFE) which has been actively enriching its product offerings to support and facilitate Hong Kong’s commodities market development in recent years.
As HKEX rolled out its commodity strategies, market participants reflected a lot of feedback and useful suggestions for future development which would require integrated efforts. Suggestions include having warehousing in Hong Kong to enable physical delivery of base metals, reducing the current contract size of Gold Futures and recognizing gold bars manufactured by qualified local refineries. There is still much room for further cooperation between the CGSE, HKFE and the overthe-counter commodity market to elevate Hong Kong’s international status as a global commodity trading centre.