Shenzhen's Qianhai special economic zone is to offer a gold trading platform soon, taking advantage of the world's strong demand for gold from the mainland. Asian News

A gold-trading platform involving 68 Hong Kong traders will start operating in Qianhai in the second quarter of next year, tasked with turning Shenzhen's special economic zone into a precious metals-trading hub in the Asia-Pacific region.

Hong Kong's Chinese Gold and Silver Exchange Society (CGSE) is testing the trading system for its 68 Qianhai registered member traders and will launch the platform after a rented temporary precious metals vault begins operation.

The exchange has already obtained approval from the Shenzhen government and the People's Bank of China Shenzhen branch to build a permanent vault in Qianhai, becoming the first non-mainland bourse to be granted onshore commodity warehousing access.

"Construction of the vault and our trade building will begin next year and take about 18 to 24 months to complete. The vault will be able to store 1,500 tons of gold," said CGSE president Haywood Cheung Tak-hay.

"The mainland had overtaken India as the biggest worldwide gold user last year. Our society has a golden dream that we want to rely on the mainland's huge market. Qianhai is a once-in-a-century opportunity for us to link up with the mainland market," he said.

"Traders will find it convenient and cheaper to store and trade gold in Qianhai. Investors will also be very interested in arbitrage opportunities concerning onshore renminbi and offshore renminbi interest rates by storing gold in our platform," Cheung told China Daily.

Zhang Bei, director general of the Qianhai Authority, said Shenzhen is an important region of the mainland's precious metals industry, "Shenzhen has more than 3,000 jewelry manufacturers and accounted for 70 percent of the market share."

He said CGSE member traders would form the base of the first big industrial cluster of Hong Kong enterprises in Qianhai, and he expected the cooperation between Shenzhen and Hong Kong to help Qianhai become an Asia-Pacific precious metals-trading hub with the powers of discourse and pricing.

"We are trying to expand the policy space for Hong Kong enterprises entering the mainland. We are applying to manage the Hong Kong and mainland enterprises with the same way under certain conditions and allow Hong Kong enterprises to enter restricted or prohibited areas," he said.

Zhang said he expected Qianhai to become a gateway for overseas enterprises entering the mainland market.

Qianhai was named a Shenzhen-Hong Kong Modern Service Industry Cooperation Zone four years ago. By the end of November, a total of 939 Hong Kong enterprises had registered in Qianhai with investments of more than 160 billion yuan ($25.9 million), accounting for 15 percent of the total investment in Qianhai.

felix@chinadailyhk.com

(HK Edition 12/09/2014 page8)