Chinese lithium giant Ganfeng plans to trade derivatives to offset overseas risks
- The largest position on any given day will not exceed 8 billion yuan (US$1.1 billion) ‘to hedge its exposure to cross-border investment risks’
Ganfeng Lithium, China’s biggest producer of the key battery metal, plans to seek shareholders’ approval to engage in the trading of financial derivatives as a hedge against risks from its rapid overseas expansion.
The company, which had the world’s third-largest lithium production capacity last year, wants to trade derivatives including options and forward contracts, whose prices are linked to assets such as stocks, indices, commodities and interest rates, it said in a statement to the Shenzhen Stock Exchange on Tuesday. Trading can take place in both overseas and over-the-counter markets.
“Ganfeng’s overseas assets have increased as it pushed forward its globalisation drive,” it said. “The company and its subsidiaries plan to start trading derivative products to a suitable scale, to hedge its exposure to cross-border investment risks and overseas market volatilities.”
The daily maximum outstanding contract volume will be capped at 8 billion yuan (US$1.1 billion), and margin deposits will be subject to the same ceiling. The company will use its own financial resources for the trading.
Ganfeng’s shares closed 2.8 per cent higher at HK$17.48 in Hong Kong on Tuesday and 0.8 per cent higher at 28.8 yuan in Shenzhen.
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Last year, Xinyu, Jiangxi province-based Ganfeng obtained a 12-month mandate from shareholders for up to 8 billion yuan of derivatives trading. Since no trading was conducted before the mandate expired last month, Gangfeng has to seek fresh approval.