HKEX Announces First Listing of Commodity L&I Product in Hong Kong

The Hong Kong Exchanges and Clearing Limited (HKEX) announced this Friday that the first listing of a commodity Leveraged and Inverse Product (L&I Product) in the Hong Kong market has taken place.

The new product is the CSOP Gold Futures Daily (2x) Leveraged Product, and, according to HKEX, complements the exchange’s existing gold Exchange Traded Funds (ETFs), providing investors with further opportunities to gain leveraged exposure to gold as an investment asset.

Commenting on the announcement, HKEX’s Head of Exchange Traded Products Brian Roberts said in the statement: “The introduction of the first gold futures Leveraged Product provides investors the ability to express a short-term market view on gold prices. Today’s listing further enriches the product diversity of Hong Kong’s ETP market.”

With volatility flooding back into the trading markets as a result of COVID-19, trading and hedging demand for gold increased. Gold is a prominent safe-haven asset, so during times of uncertainty, as is the case now, traders tend to flock to assets such as the commodity. This then leads to an uptick in demand.

According to HKEX, in the first five months of this year, the average daily turnover (ADT) of Hong Kong-listed gold ETFs increased to $100 million, up from $18 million for the same period last year.

HKEX to diversify offering

Today’s announcement follows on from HKEX announcing earlier this week that it is considering four new types of ETPs (exchange-traded products). These will include leveraged and inverse products which track mainland China A share indexes, as well as fixed-income ETFs and sectoral and thematic ETFs with underlying Chinese assets with an environmental, social and governance investing strategy, Roberts said in an interview with Bloomberg.

In its three-year plan, HKEX is aiming to diversify its offering from equities, which has been its main focus. On the 15th of May, the Government of Hong Kong published a regulation to waive the stamp duty on stock transfers for ETP market makers in the course of creating and redeeming ETP units listed in Hong Kong.

(Photo: HKEX Twitter)

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