Hong Kong to benefit as China’s carbon neutral goal and urbanisation drive commodities in post-pandemic era, HKEX CEO says

LME and Qianhai Mercantile Exchange are playing a key role in connecting China’s commodities demand and production with international markets and investors, Nicolas Aguzin tells LME Asia Metals Seminar 2022
As the world emerges from Covid-19 and moves towards recovery, ‘great lessons’ have been learned, Laura Cha says

HKEX

Enoch Yiu

Published: 9:30pm, 12 Jul 2022

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China’s 2060 carbon neutrality goal and urbanisation will be key drivers of demand for commodities globally in the post coronavirus pandemic era, creating huge opportunities for Hong Kong, according to Nicolas Aguzin.

“As the world recovers from the pandemic, the London Metal Exchange [LME] has seen increasing participation by clients from China,” Aguzin, CEO of bourse operator Hong Kong Exchanges and Clearing (HKEX), which owns the UK exchange, told the LME Asia Metals Seminar 2022 on Tuesday. The seminar, an annual event hosted by HKEX, was organised online this year because of the pandemic.

“A huge part of the global demand from green energy sectors will come from China. It is the world’s fastest-growing economy and largest carbon emitter, and it has set very ambitious decarbonisation goals,” he said.

The country needs to build a lot of infrastructure to provide wind and solar energy facilities and to develop more environmentally friendly electric public transport and vehicles to meet its goal for 2060.

Hong Kong stock exchange thrives on China card as Aguzin builds new road map

“In addition, China’s urbanisation will also be a key driver of commodity demand,” Aguzin said, adding that this involved a lot of infrastructure and residential construction. “The world is undergoing its largest wave of urban growth in history. Almost 4 billion people now live in towns and cities. By 2030, this number will grow to 5 billion, and China will account for a significant portion of this growth.”

China will lead Asia in the next development phase of global commodities markets after the resumption of manufacturing, consumption and infrastructure, Aguzin said.

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HKEX CEO Nicolas Aguzin on the future of Hong Kong’s capital market

“With our market platforms and increasingly diverse product offerings, the LME and the QME [Qianhai Mercantile Exchange] are playing a key role in connecting China’s commodities demand and production with international markets and investors,” he added.

The seminar is the first major event held after LME triggered chaos in the nickel market in March that has since drawn lawsuits from investors. The exchange halted trading in nickel and cancelled thousands of trades in the early hours of March 8, as soaring prices threatened to destabilise the market. US hedge fund Elliott Management and quantitative investment firm Jane Street Global Trading are suing the exchange for up to £471 million (US$562.6 million) in damages.

Aguzin did not mention the nickel fiasco on Tuesday, but told the Post last month that HKEX was reviewing the incident with the idea of introducing reforms at LME.

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Laura Cha Shih May-lung, HKEX’s chairwoman, told the seminar that Covid-19 had brought significant challenges to individuals, economies and markets.

“The global metal industry has been no exception. Ongoing geopolitical tensions and black swan events such as the war in Ukraine have also induced market volatility and unprecedented disruption to global supply chains,” she said. “A path to recovery, for all of us, will not be straightforward.”

But LME had coped well with difficulties such as port closures and supply chain problems during the pandemic in the past few years, she said.

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“As we step out of the shadows of Covid-19 and into a recovery world, there are great lessons learned. We are poised and ready to take advantage of the significant growth opportunities we see ahead,” Cha said.

“One change that can no longer wait is sustainability. Demand from the green energy sectors is changing the world of commodities. The commitments from governments around the world to deliver carbon neutrality is one such opportunity.”

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