2015-01-15

Copper Plunge Blamed on Chinese Hedge Funds

Chinese hedge funds drive copper plunge
Similar to a sudden drop in March 2014, the fall signals the growing importance of Chinese funds in commodities. Groups said to be active in metals markets include Zhejiang Dunhe Investment and Shanghai Chaos Investment. They declined to comment for this article.

Dealing during illiquid hours, their aggressive tactics can have speedy ramifications given the increasing presence of high-frequency traders and black-box funds, that sell or buy based on preset instructions and feed off their moves.

...Traders said the bear assault was “beautifully” timed, with the Chinese funds launching their attack at a moment when the market was on edge because of the collapse in the oil price and physical demand in China weak because of the looming lunar new year holiday.
The copper market is heavily influenced by Chinese demand and when the move is at the Chinese open, people assume it is China related. What other markets are seen as influenced by Chinese demand? Perhaps gold?

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