Chinese hedge funds help drive commo trade boom

Shanghai

CHINESE hedge funds are helping drive a commodity-derivatives trading boom in the world's biggest energy, grains and metals consumer that's defying the worst economic growth in 25 years.

Trading volumes across on the Shanghai Futures Exchange, China's biggest commodities bourse, surged 31 per cent last year while activity on exchanges in Zhengzhou and Dalian grew by 29 and 10 per cent, respectively. The expansion, compared with a 3.5 per cent increase on the London Metal Exchange, is being driven by a growing number of investment funds nurtured by new regulations, according to Hu Yuyue, a professor at Beijing Technology and Business University.

"A registration is all you need to go out and raise money for your private equity or hedge funds," said Mr Hu, who studies futures markets. "It really opened a floodgate and therefore we saw an explosive growth in these institutional investors. They are increasingly co…