Hong Kong to continue its push as trading hub for commodities and China stocks, says HKEx’s Li

HKEx chief executive Charles Li envisions expanded commodity, China stocks trading

PUBLISHED : Tuesday, 15 December, 2015, 11:28am
UPDATED : Tuesday, 15 December, 2015, 3:47pm

Hong Kong Exchanges and Clearing will explore the idea of establishing a commodity connect between Hong Kong and London as part of its plan to develop the city into a hub for commodity trading, while also expanding its role as a platform to access mainland China shares.

HKEx chief executive Charles Li Xiaojia said the plan is to position Hong Kong as a central player in the commodities business.

“The commodity connect with London will allow mainland investors to use Hong Kong as a hub to trade commodity contracts in London. For the longer term, we could also establish a similar connection with commodity exchanges in mainland China,” Li said.

Li made the comments Tuesday while attending an event for Operation Santa Claus. The annual fund raising drive is co-hosted by the South China Morning Post and RTHK.

Li did not reveal a timetable for setting up the commodity connect scheme, but said the concept could be similar to the Hong Kong and Shanghai Stock Connect.

A plan to link up the Hong Kong and Shenzhen stock markets has been put on hold until next year because of the sharp sell off that disrupted mainland shares during the summer.

In spite of the delay, Li said officials on both sides of the border remain committed to the link up.

“The Shenzhen and Hong Kong stock connect will provide more selection of mainland shares for international investors. It will strengthen Hong Kong’s role as a hub for international investors to invest in mainland stocks, while mainland investors would also use Hong Kong to invest in international products,” Li said.

Li said the exchange would also introduce more yuan products to help meet the growing demand among international traders.

The International Monetary Fund last month said it planned to add the yuan to its Special Drawing Right reserve currency basket from October next year, alongside with US dollar, euro, yen and pound. Li said he saw more opportunities ahead for Hong Kong to bolster its role as a hub for mainland investment.

“Mainland China has US$10 trillion worth of savings. The potential southbound investment from the mainland and into Hong Kong would be huge....The stock connect and commodity connect will allow them to stay at home and easily trade international products through Hong Kong,” Li said.