Hong Kong 'not ready to be a commodities trading centre'
Brokers and buyers cite lack of infrastructure, logistics and warehouses to handle trading
Commodities brokers and buyers say Hong Kong does not yet have the trading infrastructure to be a major commodities centre.
"Hong Kong's commodities trading infrastructure is not complete, which means there is little room for trades and related financial products development to occur. This results in a low participation in commodities trading," Li Baomin, chairman of Jiangxi Copper, told the London Metal Exchange conference in the city.
Li said Hong Kong also lacked the logistics and warehousing arrangements to facilitate the physical trading of commodities products.
However, he said if Hong Kong launched local copper futures, Jiangxi Copper "will participate actively".
Li is among the more than 1,000 mainland and international metal producers, end users, commodities brokers and investors in Hong Kong to participate in a three-day seminar as part of LME Week, an annual event for big players to exchange views. This marks the first time the event has been held outside London and follows Hong Kong Exchanges and Clearing's £1.39 billion (HK$16.6 billion) purchase of the London Metal Exchange.
LME, the world's largest metal exchange, offers a range of metal products from copper to aluminium with trading valued at US$14.5 trillion last year. The HKEx aimed to use the deal as a shortcut to expand into commodities trading and to diversify its income source. The bourse, which operates the local stock and futures market, is struggling with falling stock market turnover and a decline in new listings.