Fimat Futures bulks-up commodities business in Hong Kong

In anticipation of an activity surge in commodity derivatives trading by Hong Kong investors, the Hong Kong arm of international brokerage firm Fimat plans to establish a dedicated commodity trading desk by the end of the year, according to Emmanuel Faure, managing director of international brokerage firm, Fimat Futures Hong Kong.

Low interest rates and dire stock market performances - where on Monday the local benchmark index, the Hang Seng Index opened on a four-year low down 2.28% at 8,845 - has led Hong Kong investors to search for yields in commodity derivatives traded in the US and European markets, he said.

"People are increasingly interested in commodity futures, because stock markets are not active or are eroding in Hong Kong, so people are looking for markets that are active and volatile," said Faure. "There is potentially a lot of money to be made."

Currently, commodities only account for 5% of the firm's total business, but Faure expects this figure to grow to 10-20% next year. This year, the brokerage has been building up its capabilities by teaming up with 10 local houses to distribute internationally traded derivatives, made accessible through Fimat's memberships to commodities exchanges such as the Chicago Board of Trade and the London Metal Exchange, to local investors. And by the end of the year, the firm plans to hire a commodities specialist and establish a desk dedicated to cater for the ensuing demand for commodity futures and options.

Faure said the most actively traded products are futures and options on cocoa, sugar, grains and to a lesser extent metals.