Ladies and gentlemen,

Welcome to the opening ceremony for HKEx’s gold futures market.  I am pleased to announce gold futures in Hong Kong commence trading at 8:30 this morning. 

Globally, gold has increasingly been in the headlines as a safe harbour amid these turbulent times.  But even prior to the turmoil we are experiencing, interest in gold had been rising, with the price more than doubling in the past five years.

This is an ideal time to have gold futures in Hong Kong not only because of the interest in the commodity, but also the greater volatility we are seeing in its price.  Indeed, the annualised 30-day volatility of gold has jumped from 10 per cent in August 2007 to 50 per cent in August this year.  So gold futures trading here will enable investors to guard against unexpected moves in the international gold market as well as capture trading opportunities.

Today actually marks the relaunch of gold futures in Hong Kong as some of you might remember the Futures Exchange offered gold futures trading in the 1980s and 1990s*, before HKEx was established.  Our trading infrastructure and the trading environment have changed much since then.  Adding the contract to our offering broadens the HKEx derivative market’s product range to the commodities arena.  It also complements trading in our cash market where we have five gold derivative warrants and one gold exchange traded fund.

Two years ago, in September 2006, participants at the Hong Kong Economic Summit agreed Hong Kong should strengthen its financial intermediation role for the Mainland and its status as an international financial centre.  And one of the recommendations was to explore the possibility of developing a commodities market.  In view of that, last year, HKEx appointed a consultant to study the feasibility of trading commodities-related derivatives in Hong Kong.  The gold futures initiative resulted from the policy direction set by the Board in January this year after we discussed the consultant’s report and considered the recommendations.

Gold is a very important commodity in the Asian culture – about 60 per cent of gold imports and 40 per cent of gold exports take place in the region. Hong Kong is also the Mainland’s largest trading partner for gold, which, according to the World Gold Council, has been the world’s largest gold producer since 2007.  Our city accounts for 20 to 30 per cent of Asian gold exports, making it an important trading hub.

We believe HKEx’s open, competitive and well-regulated gold futures market will be able to provide a deep liquidity pool in the Asian time zone to facilitate price discovery and risk management based on the widely used London gold standard.  Indeed, for investors these days, transparency, reliability and faith in terms of counter-party trades have gained in importance given the credit crunch enfolding worldwide.  Our Exchange provides that.  And data does indeed show growing interest in exchange-traded gold products over the past decade compared to a decline in over-the-counter spot deals.

Investors who are in the gold market can make use of the gold futures we are relaunching here today and benefit from the current market conditions as well as our efficient infrastructure.  But a word of caution, particularly for those who are not investors in the gold market, they need to understand the product, its risk as well as the unprecedented volatility in the market before making investments.

Thank you.