| HONG KONG
HONG KONG May 9 Hong Kong broker BANDS
Financial is eyeing opportunities in iron ore and crude oil
markets even as the outlook for base metals appears subdued for
the rest of 2017, its senior executives said.
China's central bank has cautiously shifted to a tightening
policy bias in recent months, while Beijing has announced a
string of measures to curb financial system risk which has
soured sentiment towards metals this year, Managing Director
John Browning said.
"For the next two quarters, growth is not a requirement.
Financial stability is a requirement as we go towards the party
conference," Browning told Reuters in an interview on the
sidelines of the LMEWeek conference, referring to the 19th Party
Congress expected in the autumn.
Zinc and copper, which closed out 2016 with the best
performance in half a decade and extended their run into mid
February have both erased the year's gains.
Still, the futures brokerage, which specialises in
cross-border arbitrage, sees opportunities outside the metals
space if China opens its crude oil and iron ore contracts to
international investors as anticipated later this year.
Foreign investors are currently not able to directly invest
in China's commodity futures contracts.
"There has been a lot of growth of business in China out of
Dalian and elsewhere .. and the West hasn't caught up with it,"
said Jeremy Goldwyn, who heads the broker's Asian business
"(Western investors) are not going to directly connect to
the Chinese exchanges. The likelihood is that there's going to
be a conduit. There's a natural opportunity for companies like
BANDS Financial has been expanding its footprint into
Singapore's iron ore in preparation, given the huge
liquidity in Dalian Commodity Exchange's (DCE) iron ore
"We see the same signs (of liquidity) in the global market
for iron ore contracts at SGX, so we want to tap into this,"
said Managing Director Tiger Shi.
The recent launch of commodities derivatives in China such
as the Dalian exchange's launch of soymeal options in March,
could yield more arbitrage opportunities, Goldwyn said.
(Reporting by Melanie Burton; Editing by Richard Pullin)