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June a banner month for futures

By Wang Fei’er (Global Times)

08:10, July 03, 2012

China's futures market recorded 13.66 trillion yuan ($2.15 trillion) in turnover from 123.20 million contracts during June, up 31.53 percent and 54.1 percent year-on-year respectively, according to figures the China Futures Association issued Monday.

A variety of positive factors in recent weeks have helped local futures shrug off many of the disappointing economic figures which hounded the market from the start of the year until May, experts told the Global Times.

Among the most notable developments for Chinese futures last month was the reduction in transaction fees at the nation's four futures exchanges, said Sun Yonggang, a senior analyst from Everbright Futures. Effective June 1, the fees levied on the transfer of futures products were reduced by 12.5 percent to 50 percent of contract value.

Political developments in Europe, including pro-austerity election results in Greece, have also contributed to the current boom in China's commodities market - especially contracts for agricultural products - which is highly sensitive to events in the Continent, said Sun.

A drier than usual June - traditionally a rainy month which is critical to the growth of farm goods - has also greatly reduced this year's harvest and pushed up expectations that prices will soon rise even higher, Shi Yan, deputy director of the research institute at Xinhu Futures, told the Global Times.

Meanwhile, the world's largest producer of corn and soybeans, the US, also suffered from draughts in June, propping up prices for global agricultural futures contracts, Shi noted.

"It's a right time for futures investors to long farming products, which they are currently doing," Shi said.

Experts are already casting a favorable outlook on the futures market during the second half of this year, given the government's pledge to develop the market over the long run by promoting the diversification of contracts and encouraging fund companies to enter the market.

With the country likely to roll out a series of new commodities contracts and a greater number of financial futures products, more investors are expected to tap into the futures market before the year is out, Sun said.

The China Financial Futures Exchange announced last month that it has started preparation for the eventual trading of treasury bond futures, without offering a specific time frame.

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