Hong Kong starts trading gold in renminbi (HKMEX)

[pmbug]

Hong Kong’s Chinese Gold & Silver Exchange Society officially starts trading gold denominated in renminbi today, in a bid to attract the HK$600 billion of Chinese currency sitting on deposit in the city’s banks.

Haywood Cheung, president of the 101-year-old bullion exchange, said the so-called Renminbi Kilobar Gold contracts could boost trading volumes by up to 30%, or HK$40 billion a day, during the next six months. Growth has already been strong this year, with average daily electronic transactions reaching HK$136 billion after a full-year average of just HK$31 billion in 2010.

“By attracting both local and international investors, the Renminbi Kilobar Gold is a significant step towards internationalising the renminbi,” said Cheung. “It also consolidates Hong Kong’s position as an offshore renminbi centre by providing investors with a new alternative in leveraged trading of renminbi.”

Investors who choose to convert their renminbi bank deposits into the new gold contracts can gear up their exposure to the currency by as much as 25 times. During a visit to the exchange on Friday, Cheung told FinanceAsia that this ability to use leverage will prove attractive to investors, who until now have lacked opportunities to put their renminbi to work.
...

http://www.financeasia.com/News/276911,hong-kong-starts-trading-gold-in-renminbi.aspx

It's not clear from the article is this is part of the PAGE or not.

It will be interesting to see if this impacts demand for physical gold in Asia.

 

[hazek]

Yes these are two separate exchanges.

 

[pmbug]

...
This week the Chinese Gold & Silver Exchange Society (CGSE) – a bullion exchange based in Hong Kong – started trading gold quoted in Chinese yuan. The contract, called Renminbi Kilobar Gold, is promoted as offering investors a "double safe haven" – exposure to both gold and an appreciating currency. ...

Whether or not the yuan can deliver its part of the "double safe haven plan," Renminbi Kilobar Gold trading in the first day was strong, with 322 traded gold contracts totaling 112 million yuan (or US$17.5 million). The settlement price ended up at 346.95 yuan per gram, or $1,693.9 an ounce.
...
To make trading convenient for overseas investors, trading hours have been set for 8 a.m. to 3:30 a.m. the next day, Hong Kong time. Traders may choose to settle their trades either in cash or with spot gold delivery. Also, there is apparently a mechanism for investors to buy with US dollars.
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More: http://www.24hgold.com/english/news...0G10020&redirect=false&contributor=Vedran+Vuk

 

[pmbug]

...
On the very first day, reports indicate yuan gold contracts amounting to a total of 322 kilogram were traded, with the settlement price set at 346.95 yuan per gram, or US$ 1,693.9 an ounce - a significant premium on U.S. and European prices.
...

http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=137797&sn=Detail&pid=102055

...
Gold trading in yuan began on Monday at Hong Kong’s Chinese Gold and Silver Exchange and got off to blistering start as volume tripled to almost $800 million per day, members favoring the convenience of using the local currency rather than U.S. dollars in this latest step by China to expand the role of its currency.

Initial reports indicated that yuan gold contracts traded at a significant premium to U.S. dollar denominated contracts, perhaps a sign of things to come as China becomes a bigger force in precious metals markets. The exchange also plans to launch yuan silver trading, though they didn't specify a time frame.
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http://seekingalpha.com/article/301...of-cftc-position-limits-on-silver?source=feed

 

[pmbug]

The Hong Kong Mercantile Exchange (HKMEx) plans to launch yuan-settled gold and copper futures by July, its president said on Friday, as it looks to tap growing interest in commodities from Chinese investors.

Albert Helmig also told reporters in Shanghai that the bourse would offer yuan-denominated contracts for other industrial metals in the next 12 months.
...
HKMEx launched trading of U.S. dollar-settled gold <0#HKG:> and silver <0#HKS:> futures last year.

http://www.reuters.com/article/2012/03/23/hkmex-futures-idUSL3E8EN2BL20120323

I didn't see any details in the report.

 

[rblong2us]

HKMEX to Cease Trading, Will Close Out & Cash Settle Open Contracts Monday!


http://silverdoctors.com/hkmex-to-cease-trading-will-close-out-cash-settle-open-contracts-monday/

 

[Unbeatable]

Big news!

Edit: The counter argument is something like

Given how this article cherry picked the sensational bits out of the press release and ignored the parts about no volume = no revenue and we can’t pay our bills… I’m leaning this is just a failed contract due to lack of interest by market participants.

But then why so sudden an announcement and why not offer to settle in Gold for those that wish to stand for delivery?

The article also says -

The Shanghai Gold Exchange appears to have stopped delivering gold as well

but I don't know if that's true/what they have to support that statement

 

[pmbug]

Disagree with the Doc's characterization of HKMEX. It wasn't heralded like PAGE was.

It's still significant that the exchange is having to close it's doors. The money in the HKMEX system chasing physical PMs will have to find another route.

 

[pmbug]

What's this all about???

Three men were charged on Friday in a Hong Kong court with possessing false documents including a cheque for $460 million in connection with an investigation into the city's shuttered Hong Kong Mercantile Exchange.

The exchange, which operated a trading platform for gold and silver futures, surrendered its licence to the Securities and Futures Commission at the weekend, saying it did not have enough trading revenues to support its operating expenses.

The SFC, the city's financial watchdog, on Tuesday said it had found serious suspected irregularities in the exchange's operations and referred the case to the police for a criminal investigation.
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More: http://www.mineweb.com/mineweb/content/en//mineweb-fast-news?oid=191450&sn=Detail

 

[ancona]

If it smells like fraud, and looks like fraud.....

Actually, this could be Hong Kong officials simply discrediting some guys to make sure they can't set up another gold re-hypothecation business elsewhere. Nothing like an arrest and trial by media to accomplish just that.-Or-

they could have been forced out of business by some of the shadier participants in Hong Kong's business cartels. Hong Kong is a fast moving place, and if you don't get out of teh way sometimes, you are certain to be run over.

 

[Aubuy]

Recent graduates from the Madoff School of Business, Hong Kong campus. They were tops in their class.