Gold takes centre stage as Hong Kong hosts first committee to build commodities ecosystem
Hong Kong is putting gold at the centre of its push to become a global commodities trading hub, with officials prioritising plans for an international gold trading centre alongside a broader strategy to expand the city’s role in physical trade, derivatives and logistics.
The government’s newly formed Commodity Strategy Committee held its first meeting on Monday under Financial Secretary Paul Chan Mo-po, as Hong Kong looked to build out a commodities ecosystem that would generate new growth beyond traditional finance.
Secretary for Financial Services and the Treasury Christopher Hui Ching-yu told a mainland media outlet that developing an international gold trading centre would be a priority.
Hong Kong planned to establish a gold central clearing system and a gold industry association next year, and to deepen cooperation with the Shanghai Gold Exchange to expand its influence in international gold pricing, Hui said.
Hui also outlined a proposed “Hong Kong import – Shenzhen refining – overseas re-export” model aimed at attracting overseas gold refiners, adding that some firms were already exploring the establishment of refineries in the city.
Chan told Monday’s committee meeting, meanwhile, that “Hong Kong had enormous potential to develop its commodities market”, citing the free flow of capital, goods and information under “one country, two systems”.
A stronger commodities market, he said, would enable the city to contribute to national and global development while creating “new and diversified opportunities” for Hong Kong’s own growth.
Chan noted that China – one of the world’s largest consumers and trading markets for commodities – was accelerating high-quality development while advancing its carbon goals and channelling investment into green industries, trends that were reshaping demand for energy, metals and other raw materials.
The Commodity Strategy Committee was formed after the chief executive’s policy address in September, which outlined plans to develop Hong Kong’s commodity trading ecosystem. The committee aims to bring together leaders from finance, commerce, shipping, logistics and professional services to study trends in global commodity markets and advise on policy.
Its remit includes reviewing physical trade, financial and derivatives trading, and shipping and logistics activities; identifying opportunities in major and emerging commodity categories; refining market mechanisms and regulatory frameworks; strengthening the broader industry ecosystem; and exploring deeper connectivity with mainland markets, Chan said.
Hong Kong has been laying the groundwork for a commodities push over the past two years.
The London Metal Exchange in January designated Hong Kong as an approved warehouse location, linking the city more directly to mainland China’s metals market.
The Shanghai Gold Exchange opened its first offshore warehouse in Hong Kong in June.
By July, eight LME-certified warehouses had begun operations in the city, handling more than 8,000 tonnes of exchange-registered metals including aluminium, copper, zinc, lead, nickel and tin.
Hendrick Sin, a Hong Kong deputy to the National People’s Congress, said China ranked among the world’s largest importers and consumers of commodities, but lacked pricing power commensurate with its trading position in many critical minerals and energy resources, leaving domestic industries exposed to international price volatility.
He said greater concentration of commodity traders in Hong Kong would lift demand for services including shipping, logistics, warehousing, insurance, legal support and risk management, injecting new momentum into the economy.
“The city’s commodity development strategy focuses on categories including non-ferrous metals and raw materials needed for infrastructure projects in countries involved with the Belt and Road Initiative,” Sin said. “This would help to advance renminbi internationalisation.”
Source: https://www.scmp.com/