International gold trading launched in Shanghai free-trade zone
City's free-trade zone toured by Premier Li Keqiang as Shanghai Gold Exchange unveils its trading platform for international investors
The Shanghai Gold Exchange officially launched its international trading platform in the city's free-trade zone (FTZ) last night, the first such board in the zone, with hopes of setting benchmark prices for the precious metal in Asia.
It could pave the way for the launch of crude oil futures and other key commodities including iron ore in the testing ground for mainland economic reform.
Premier Li Keqiang made an inspection tour of the 28 square kilometre zone yesterday following a no-show on September 29 last year, when it was inaugurated.
"The free-trade zone in Shanghai will have a brighter future and Shanghai will have a brighter future," the premier told officials and others during the tour, Xinhua reported. "I wish the FTZ to be prosperous and developed."
The premier required the exchange to do its utmost to increase its influence globally, central bank governor Zhou Xiaochuan said at the launch ceremony last night.
Li was a strong advocate for the Hong Kong-style free port and made the final decision on creating the zone in Shanghai last year despite facing obstruction from ministry-level authorities.
The Shanghai Futures Exchange planned to start trading oil futures in the first half of this year on a newly established trading platform in the zone, but it has yet to receive the green light.
Li yesterday asked local officials to be clear in requesting specific policy support from the central government, indicating that he would push the ministry-level regulators to speed up liberalisations in the zone.
The Shanghai Gold Exchange was expected to unveil the international exchange on September 29, but it launched the platform 11 days ahead of schedule to coincide with the premier's visit.
The mainland's equity and commodity markets are still off-limits to foreign investors since the yuan is not fully convertible, but the central government is eager to internationalise the currency and gain pricing power in key commodities worldwide.
The zone is seen by the premier as an ideal "offshore" market and an experimental ground for pilot liberalisations.
About 40 international members including Goldman Sachs will participate in the gold trading in the zone, which links with the domestic trading on the Shanghai Gold Exchange.
China leapfrogged India to become the world's largest gold bullion buyer last year and the World Gold Council predicted that gold demand from mainland investors would remain strong.
"If the trading volume in Shanghai was high, Shanghai would definitely have an influence in global gold prices," said Albert Cheng Leung-ho, the council's managing director, Far East.
