A short summary of seminar "Access to China: Chinese Derivatives Trading and Arbitrage Essentials"

On 2 November, the conference "Access to China: Chinese Derivatives Trading and Arbitrage Essentials", hosted by Aarna Capital and co-organised by Nanhua Futures, was successfully held in Dubai. Guest speakers from Nanhua UK and Shanghai International Energy Exchange (INE) were invited to discuss the pathways to participate in China's derivatives market. Over 50 overseas investors attended the venue.

Conference?Theme

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Macroeconomic Outlook?for the next 10 years

A?senior economy strategist?gave a fascinating sharing on the macroeconomic outlook. He said that the world economy would see four rounds of economic expansion and contraction in the next decade, with significant impacts on commodity markets. Energy prices will rise sharply as the economy recovers, while food prices will fall after the second half of FY24. In addition, global economic fragmentation remains another major risk, especially for developing economies, given geopolitical tensions such as the crisis in Ukraine. This could lead to more restrictions on trade, especially with regard to the cross-border movement of key minerals, capital, technology and workers, and could also exacerbate the volatility of commodity prices and hamper multilateral cooperation among countries.

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The latest developments in the opening up of China's futures market

The guest?speaker?from the Shanghai Futures Exchange (SHFE)?explained the opening history of the Shanghai Futures Exchange and the new development of the QFII system. She introduced in detail the QFII and international products that can be traded on the SHFE and the INE, and made an in-depth comparison of the two investment methods in terms of entry barriers, trading paths, margins, and investment scope. She said that in the future, the exchange is committed to developing more new international products in different fields.

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China Derivatives Trading and Arbitrage Essentials

Nanhua's UK guest?speaker brought the key points of China derivatives trading and arbitrage strategy to share with the audience. Taking copper as an example, he focused on the differences between SHFE copper,?INE?copper, and LME copper in terms of contract specifications, trading strategies, market opportunities and other aspects, and made an in-depth comparison. He said that the trading volume of INE Copper contract is stable at about 10% of SHFE Copper, and the open positions are also growing steadily. As the Chinese market continues to open up, it is expected that INE Copper will play an increasingly important role in determining copper prices in Asia. INE Copper will also become a more important pricing benchmark as more and more market participants use it as a reference price for their physical business.

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Paths for Overseas?Participation in China's Derivatives Market

A member of?Nanhua?Futures' international business team delivered a fascinating presentation on offshore investment in China, comprehensively explaining the trading opportunities in China's commodity market and the ways for offshore investors to participate in it. With the booming development of China's commodity market in recent years and the increasing trading scale, there is a growing demand for foreign investors to allocate Chinese assets. She introduced in detail the ways for foreign investors to participate in China, such as WOFE, QFII, International contracts and CIBM Direct (China Interbank Bond Market Direct Investment),?and highlighted the differences in the tradable underlying/rates/delivery methods under the international?contracts and QFII, as well as the one-stop comprehensive financial solutions that Nanhua Futures can provide for foreign investors.

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The conference quickly came to an end with the tight and exciting sharing by the guests. After the conference, a number of participating investors had in-depth exchanges with the guests, and said that the conference had inspired them to participate in the Chinese market. In the future, Nanhua?Futures will continue to follow the internationalisation trend and rely on its own professional strength to fully communicate with more investors in subsequent similar events.