Lessons from Chinese commodities market - The Hindu Business

Lessons from Chinese commodities market - The Hindu BusinessLine


Lessons from Chinese commodities market
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Its strong growth is aided by a vast retail trader base, efficient warehousing, and limiting excessive speculation
The Chinese commodities derivatives market has grown at a rapid pace in the recent past. Today, Chinese exchanges are among the top five globally. Out of the top 15 futures contracts in the world, nine are traded on Chinese exchanges. A recent field study on the Chinese market offers several interesting insights about its growth dynamics.
First, while China has significant pricing power in many commodities on account of its share of demand or supply, the role of its vast retail trader base that allows it to build market volume often goes unnoticed. The volumes contributed by retail traders are typically 50-95 per cent with several factors driving the retail excitement.

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