HONG Kong is considering introducing a crude oil futures market to help Asian oil importers hedge price risks, Financial Secretary John Tsang said yesterday.
The lack of a pricing indicator reflecting local supply and demand in Asia has led to China and other countries in the region paying more for oil than Europe and the United States, Tsang wrote in an opinion piece published in several local newspapers yesterday. China, one of the world's three biggest oil consumers and importers, uses Dubai futures as a reference for bargaining, he said.
"It is increasingly important for China to develop a full-fledged oil market, a crucial part of which would be an internationalized oil derivatives market" allowing Asian oil importers to hedge price risks "in a fair and transparent manner in the Asian time zone," he wrote.
Introducing oil futures is one of the ways that Tsang proposed to develop Hong Kong's status as a commodities trading center. His plans will pit Hong Kong against Singapore, Asia's biggest oil trading center, which handles about US$300 billion worth of trade annually, said Bloomberg News.
Hong Kong also aims to grab a bigger share of the Islamic finance market, as it works on "a proper mechanism" to deal with tax issues relating to the issuance of Islamic bonds in the city, Tsang said. Islamic finance, worth around US$1 trillion, is expected to grow 15 percent annually, he said. Issuers of Islamic bonds raised a record US$30.8 billion in 2007.