LME woos China’s traders as Shanghai vies for global stake

Warehouses on mainland needed...

Commodities Bourses

Copper futures volume gained 17 percent on the Shanghai exchange last year as transactions through the 136-year-old LME expanded 4 percent. The London bourse says it handled futures contracts representing 3.6 billion metric tons of industrial metals last year, or more than 80 percent of the global market.

The LME’s turnover of $14.5 trillion compares with $4 trillion for industrial metals at the Shanghai bourse. Volumes through Comex in New York and the Multi Commodity Exchange of India take the total to at least $20.6 trillion, according to data compiled by Bloomberg based on the 10 biggest commodities bourses ranked by the World Federation of Exchanges.

HKEx’s purchase of the LME was the most expensive exchange acquisition over $1 billion since at least 2000, according to data compiled by Bloomberg. It’s “going to be a great bargain if you look at it a few years from now,” Li told a conference in Hong Kong in March. Shares of HKEx fell 9.6 percent this year, compared with a 11 percent retreat in the Hang Seng Index.

Bond Sale

Li has the advantage of having been brought up in mainland China and also worked for Western companies. He grew up in a rural territory bordering Mongolia and got a degree in English literature. He started his career at the state-owned China Daily and subsequently worked with Manhattan law firm Brown & Wood, representing China on its first international bond sale in 1994, valued at $1 billion.

“It will be a better opportunity being driven by a Chinese business leader out of Hong Kong than by say Westerners from the other side of the world,” said Jeremy Goldwyn, a director at London-based Sucden Financial Ltd., which trades on the LME. “But that also wouldn’t mean a rapid green light either.”

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Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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