Matt Felsman

Commodities, precious metals and natural resources have soared in the last few weeks. Oil’s resilience, a lower $USD and supportive economic data out of China are making headlines as the key catalysts for the moves, but what investors really need to take note of is a wave of trading on China’s exchanges. Trading in futures on everything from steel reinforcement bars to cotton escalated last week as money moved away from bonds and stocks and into commodities. Last week the Shanghai Composite fell -3.9% while trading in steel futures hit their daily maximum advance limits twice, with turnover of a single steel bar contract alone on Thursday worth nearly 50% more than the total value traded on the entire Shanghai exchange. The transaction volume and turnover was so high it prompted regulators to issue warnings last week, in addition to exchanges tripling transaction fees and raising margin requirements in an effort to cool what they described as “overheated” trading. In January leveraged trading sparked a 23% decline in Chinese equity markets and massive increases in volatility globally. Full Read: (VIEW LINK)


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