Recent volatility in global commodity prices may help lift the trading volume on the London Metal Exchange as demand for hedging services increases.
Chow Chung-kong, chairman of Hong Kong Exchanges and Clearing (0388), which owns the LME, said trading volume on the British-based platform reached record highs in April and May, thanks to fluctuating commodity prices.
Chow's comments yesterday came after the LME signed a memorandum of understanding with the Bank of China (3988) to examine the feasibility of exchange contracts being cleared in yuan.
The MoU will also facilitate the development of yuan-denominated commodity products.
Charles Li Xiaojia, chief executive of the HKEx, expects such products to be available soon on the LME.
The commodity bourse was acquired by HKEx last year and it will host its first LME Week Asia in Hong Kong from today.
Speaking about the plunge in local stocks, with the Hang Seng Index hitting a 20-month low yesterday, Li said the market will improve during the second half and so will activities concerning initial public offerings.
Chow said current market sentiment may deter companies from launching IPOs on the local bourse. However the HKEx remains keen to draw more companies, including Alibaba.com, to float in the city.
HKEx, NYSE, and Nasdaq are also trying to lure the mainland e-commerce giant to go public on their bourses.
The size of the Alibaba IPO is seen exceeding that of Facebook, which raised US$16 billion (HK$124.8 billion) last year.
Li said many firms remain interested in going public in Hong Kong.
He is confident HKEx will regain the global top spot as the premier fund-raising destination for IPOs this year .