China’s metal funds: where do they come from? And where are they going? [UPDATE]

The founders of the commodity hedge funds in China that seized the attention of the global metal markets in such a dramatic fashion in March had a long history of trading local futures markets in China before they entered the international markets: in copper and in cotton, for example.

In China, Shanghai Chaos Investment’s founder and owner Weidong Ge is associated with cotton and soybeans, while Zhejiang Dunhe’s Qingjun Ye began his career trading copper in the early 1990s.
In the V-shaped crash and boom of 2008-2010, the assets under management of some Chinese hedge funds grew rapidly.
In addition to the capital of their founders, they raised investment privately, through friends and family, but also through government-regulated sunshine channels: trust products, securities companies’ asset management vehicles and wealth management vehicles.
This increase in size, and international outlook, has increased their influence in metal markets over recent years.
Commodity futures traders...
The funds have strong ties to the physical markets in China, either by virtue of their long experience trading in the country’s futures markets, or as a result of some of their investment coming from participants in the physical business in the country.

Some of...

Published

Steel MR

June 27, 2014

08:00 GMT

London