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China's futures industry is expecting an upshift in the coming years as the country becomes increasingly exposed to fluctuations in the world economy with its entry to the World Trade Organization (WTO).
The Beijing-based English newspaper China Daily Tuesday quoted Peng Junheng, deputy general manager of the Shanghai Futures Exchange, one of the country's three futures exchanges, as saying that Chinese enterprises will increasingly find the futures marketan indispensable tool to avoid foreseeable risks as prices become more unpredictable due to the growing role of market forces.
Industry insiders have already been calling for the launch of new futures products to tackle price volatility in securities and strategic commodities -- such as oil and agriculture products.
The stock index futures is a favorite candidate to take the lead, after more than ten years of development on China's stock market, according to the newspaper.
As the recent debut of China's first open-ended funds reinforced the ranks of institutional investors - for which the new derivative is mainly designed - risks in misusing or abusing the index futures are contained.
Peng and his co-authors, in a report on the future of China's futures industry following the WTO entry, also called for the creation of foreign exchange futures, Treasury debt futures and oil futures.
Chinese airline firms have already learned the importance of futures from oil price hikes in late 1999 and early last year, with many of them forced to raise ticket prices of offset increased costs, which could have been avoided with futures transactions, analysts said.
(eastday.com November 20, 2001)
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