Standard Chartered Plc, which derived more than 60 percent of 2012 revenue from the Asia-Pacific region, moved its global head of metals trading to Hong Kong from London and plans to build up its presence there.
Jeremy East, who’s traded in the U.K. capital for about three decades, transferred this month, and he will expand the metals desk in Hong Kong to be half the size of the London team in two years from about a quarter at present, according to an interview. East declined to give numbers. The London-based bank may expand into gold storage in Hong Kong and its unit started physical-metals trade in Shanghai, he said yesterday.
Hong Kong Exchanges & Clearing Ltd. bought the London Metal Exchange for $2.2 billion in December, and plans to introduce raw-material contracts in the region as part of its growth strategy. China’s commodity-derivatives trade led the expansion of global volumes in 2012, according to data from the Paris-based World Federation of Exchanges. China is the world’s largest user of base metals and biggest gold producer.
“Last year, with the LME purchase by HKEx and the fact that volume of copper on the Shanghai Futures Exchange was sometimes larger than the LME, the structure of the market is changing,” said East, who joined Standard Chartered in 2006. “We have a big team in London but I can see the growth here.”
Companies including Vitol Group, Trafigura Beheer BV and Mercuria Energy Group Ltd. have been adding people in Asia. Vitol, the world’s largest independent oil trader, began trading grains from Singapore and Geneva this year, while Mercuria hired traders in China and Singapore in 2012 as the Geneva-based company expanded into agricultural commodities and metals.
Standard Chartered, a clearing member at the LME, the largest base-metals market, can from this week issue LME contracts out of Hong Kong, on top of London, East said. The unit in Shanghai has started trade on a trial basis and will extend into farm products, such as soybeans, later, he said.
China accounted for 41 percent of global copper demand last year and 43 percent of aluminum usage, Barclays Plc data show. Price-sensitive metals news increasingly has Asian origins, and regional companies need to be able to manage business in the same time zone, K.C. Chan, Hong Kong’s secretary for financial services and the Treasury, told an LME meeting this week.
A gold vault in Asia, possibly Hong Kong, would help to ensure the bank can provide faster supply to clients, East said. Price declines this year helped to attract physical demand from small-scale investors, especially in China, he said.
Gold has plunged 26 percent this year amid speculation that improvement in the U.S. economy will spur the Federal Reserve to scale back stimulus, boosting the dollar. Investors have sold metal from exchange-traded products at a record pace in 2013.
Bullion held for ETPs is in large bars, while buyers in Asia want smaller sizes, forcing refiners to convert the gold to fit retail demand, he said. Bullion suitable for so-called good delivery in London is generally close to 400 ounces or 12.5 kilograms, according to the London Bullion Market Association.