Hong Kong Planning Futures Exchange

The WSJ is reporting that Hong Kong is planning a new exchange that will trade fuel oil contracts. The new exchange, to be called the Hong Kong Mercantile Exchange - HKMEx, is expected to open as early as Q1 of 2009 and will sell U.S. dollar denominated contracts for delivery of fuel oil to China. If successful, China is expected to expand into other commodities it uses, such as soybeans and iron ore. All this is in an attempt to turn Hong Kong into an Asia-Pacific financial hub. China has tried similar exchanges unsuccessfully in the past, but conditions have changed. More money and capital is now flowing into the east, in particular investment in energy, metals, and soft commodities. The exchange will also give U.S. traders another outlet for both in- and after-market hours trading. Given all the consolidation that is occurring in the industry, it will be interesting to see if the HKMEx can maintain the necessary volumes to stay afloat, and if successful, whether or not it will eventually become an acquirer, the one being acquired, or stay independent. But then again, lets not get ahead of ourselves.