Page 16 - Bullion World Volume 02 Issue 02 June 2022_Neat

Bullion World | Volume 2 | Issue 02 | June 2022

Challenges faced

by regional market

players in Asia

The bullion market in Asia is going One of the most vexing aspects
through a slow transformation market observers note is that the
which has already resulted in vast share of gold and silver that
increased marginalization of the is produced and exported from Sovereign Metals Limited is in the
mid-tier players. Asia’s regional countries like Australia, Indonesia, business of refining precious metals
corporates and institutions are Korea, Philippines and China is (gold and silver) and supplying
being hampered by onerous sold to non-Asian players who in highest and most consistent quality
onboarding requirements and turn deliver the metal to consuming products and related services and
reduced access to international countries like China, Thailand, solution to customers at their place
counterparties. Therefore, costs India, Vietnam, Cambodia and of convenience by leveraging its
of doing business are rising and Malaysia. The value of direct competent and customer-focused
margins are under pressure. trade between these countries human resources, industry-leading
accounts for less than 15% of the technology infrastructure and
In our view, there are major five market. The predominant reasons transparent and globally
challenges for Asia’s market players behind this are to do with lack compliant-sourcing practices.
which need to be addressed of trust, visibility, and financing.
through innovative and customized Accordingly, we are working on Sovereign Metals Limited would
solutions. They are, in no particular building direct relationships between pursue environmentally sustainable
Mr Sunil Kashyap manufacturing practices and would
Director, FinMet Pte Ltd. order, the following : large producers and consumers by
1. Minimal direct physical metal providing more market intelligence strive to be a world leader in its
trade between producing and and understanding to both sides. We chosen segment from India.
consuming countries in Asia are creating trust through dialogue
2. Reduced access to market and open communication. The
liquidity benefit of forging these relationships
3. Limited role of Regional is that it enables both buyers and
commercial banks sellers to share the discounts and www.sovereignmetals.in
4. Lack of financing options for premiums that prevail in the market
metal inventory which are currently being retained by
5. Hurdles for Asian “champions” intermediaries.
to become Global “winners”
The reduced activity in Asia of
At FinMet, we are taking a closer some major international bullion
look at each of these issues, banks has crimped the ability of
dissecting the reasons behind them mid-tier players here to access
and building possible pathways liquidity especially in the over-the-
to solutions. In this article we will counter market. Opening a trading
share some of the work we have account with an established liquidity
done on the subject. provider can often take 4-6 months

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