Renminbi pricing power
Haywood Cheung Tak-hay, chairman of Hong Kong Gold Exchange, says if Hong Kong, as a premier offshore renminbi hub, could wield greater influence over gold pricing, it would help lift the currency’s international standing.For decades, gold has primarily been priced in US dollars, while renminbi could be a reliable alternative for sector stakeholders, according to Cheung. He says if more gold transactions are priced, settled and delivered in renminbi, it would drive a wider circulation of the currency across global markets.
“For the general public, if they don’t need to exchange currencies, say, converting US dollars into renminbi or other currencies, I believe the cost of buying and selling gold would be relatively lower for them,” he says. However, he emphasizes that to elevate Hong Kong’s voice, the city must boost local gold-related financial activities, whether on-exchange or over-the-counter, otherwise, investors would move their physical holdings elsewhere at any time. “To encourage people to keep their gold in Hong Kong, there has to be a wide range of derivatives to support it,” he says. Only when Hong Kong can offer more options, including physically-backed gold futures, exchange-traded funds and tokenized gold, will “gold assets truly remain here”.
Cheung says that the local precious metals exchange, which was reorganized last year from a membership-based institution to its current corporate structure, has also been keeping pace with the times and is committed to responding to different market players’ needs. In January, the HKGX announced a tie-up with TGX Technology — a subsidiary of Alibaba’s AGTech Holdings — to develop a new precious metals trading platform with multi-product support and multi-currency pricing, settlement and clearing.
Cheung says the platform involves an initial investment of HK$1 billion, and aims to launch as early as September this year. He hopes the channel will link up with the government-led central clearing system, allowing local industry efforts to complement official plans. He suggests the authorities leverage the foundation built by local players.
“Hong Kong’s gold industry has been conducting international trading for at least 60 years — it’s a fact that can’t be ignored… With such an established foundation, we’re confident of significantly fast-tracking the city’s ambition to be a global gold trading hub,” he says.
Socrue : China Daily HK
