Hong Kong Exchanges & Clearing Ltd. plans to develop yuan-denominated commodities products as the second-largest bourse operator expands into China following its $2.2 billion takeover of the London Metal Exchange.
The bourse would probably start monthly cash-settled metals products denominated in yuan, then move into other commodities and physical settlement, Chief Executive Officer Charles Li said at an LME meeting in Hong Kong. The exchange may increase fees, when allowed to do so, he said today.
Hong Kong Exchanges bought the world’s largest base-metals marketplace in December to enter commodities and plans to push into China, the world’s top user of industrial metals. Hong Kong is home to the biggest offshore pool of the Chinese currency and is able to support trading of metals contracts in yuan, K.C. Chan, the government’s secretary for financial services and the Treasury, told the LME meeting.
“The purpose is to use LME as a catalyst for us to really move rapidly into commodities, and be able to leverage on the massive, accelerated pace of internationalization of China’s market,” Li told Rishaad Salamat in a Bloomberg Television interview today. “The long, bullish outlook for commodities from China is not over at all.”
The Hang Seng Index of equities has dropped 13% this year through yesterday amid signs China’s economy is faltering, making Hong Kong the worst performer among developed share markets, according to data compiled by Bloomberg. Stock in the HKEx lost 14% through today, ending at HK$114.10 in Hong Kong after losing 1.6%. Commodities as tracked by the Standard & Poor’s GSCI Index have declined 5.1%.
As diners met over an eight-course Chinese meal at the Convention Hall of Hong Kong Convention and Exhibition Center, Li dressed up as an English footballer with David Beckham’s mask to entertain some 900 guests.
“After spending $2.2 billion for the LME, I cannot afford to hire the real Beckham,” he said on the stage. The menu included sea cucumber, double boiled black chicken soup with mushroom, and fried rice with squid and meats.