Highly valued opening day
()
12/07/2001
The simulated operation of the much-heralded Shanghai Gold Exchange started last Wednesday. It not only showed China's commitment to the deregulation of the country's gold market, but also symbolized that Shanghai has obtained a complete list of markets to become a financial centre. According to other countries' experience, a stock market, a futures exchange and a foreign exchange trading centre as well as a gold exchange are essential for a city to become a financial hub. In addition to that, the city is home to two other State-level markets - the Shanghai Diamond Exchange and the National Silver Exchange. Experts indicate that the opening of the gold exchange will further improve the integrity of China's financial markets. "Everything went smoothly today, which lends us the full confidence in the exchange's official launch early next year," said Shen Xiangrong, chairman of the exchange's executive council. After the exchange's official kickoff, its 108 members will be able to trade gold freely for the first time since 1949. "We will set a director price for the gold at the beginning according to the international gold price. After that, it's all the market's business," said exchange president Wang Jie. Currently, gold trading is rigidly controlled by the government, and the People's Bank of China (PBOC) is the only institution to purchase and allocate gold. It fixes the purchase and sales price in line with global market rates. But the PBOC won't wash its hands of gold distribution soon. It will continue to buy gold from miners and allocate it to special gold users like the military and scientific institutions at the bank's price. Ye Yingnan, director of the Currency, Gold and Silver Bureau under PBOC, said the central bank will eventually withdraw from gold control and let the market decide the price. Insiders believe gold exchange will play the dominant role in China's gold trading. Among the first batch of 108 members, 24 gold producers control 75 per cent of national gold output, 63 users account for 80 per cent of Chinese gold consumption, and eight smelters have a 90 per cent market share. "Taking 13 commercial bank members into consideration, the Shanghai Gold Exchange will surely serve as the major channel for China's gold trading," Shen said. Gold futures and foreign traders will be introduced to the market as China further deregulates its gold market.
|
