Upway Global Among First Hong Kong Precious Metals Firms to Enter Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone

2014-12-09 15:36:14 | 2559

On 8 December 2014, the 3rd Chinese Gold & Silver Exchange Society (CGSE) Silver Symposium and CGSE Qianhai Gold & Silver Trading Promotion Conference was successfully held in Hong Kong. The event was hosted by the Chinese Gold & Silver Exchange Society, marking the official launch of CGSE’s Qianhai project in the fourth quarter of the year. A total of 68 member firms entered the Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone (“Qianhai Cooperation Zone”) as the first batch of Hong Kong exchange-platform enterprises to establish a presence there.

Upway Global is honored to be among the first enterprises to settle in the Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone.

CGSE and the Shanghai Gold Exchange have already signed an agreement to implement the “Gold Hong Kong–Shanghai Connect”, opening a key channel for the precious-metals industry to directly access the mainland gold market and positioning Hong Kong as an important hub in the international market. Now in its third edition, the symposium has received official support from the Qianhai Authority, InvestHK and the Financial Dispute Resolution Centre. The event gathered hundreds of experts from mainland China, Hong Kong and Southeast Asia. Its scope and depth have grown significantly, symbolising that this long?established marketplace, CGSE, will expand its business footprint by entering Qianhai.

The symposium invited Mr. Qiu Hong, Deputy Director of the Liaison Office of the Central People’s Government in the HKSAR, as the officiating guest. A number of industry experts shared the latest market trends, including: Mr. Zhang Bei, Director of the Qianhai Authority, Ms. Tian Min, Deputy Director of the Qianhai Authority, Dr. Dong Feng from the Precious Metals Trading Center of the Industrial and Commercial Bank of China Head Office, Mr. Qu Mingyu from the RMB Trading Department of Bank of China, Shanghai, Mr. Huang Chongchong, Chairman of Zhejiang Zhoushan Zheshang Zhongzhou Silver Trading Co., Ltd. and Executive Director of the National Silver Culture Research Special Fund. In addition, CGSE Chairman Mr. Haywood Cheung introduced the business model of Shenzhen Qianhai Chinese Gold & Silver Exchange Society Co., Ltd. The important milestone of CGSE’s entry into Qianhai was jointly witnessed by Deputy Director Qiu Hong and Director Zhang Bei.

In his speech, Director Zhang Bei of the Qianhai Authority said:

“We hope that after CGSE comes to Qianhai, on the one hand it can bring to Qianhai its mature international operating experience, including the sound systems and international practices it has developed over more than a hundred years, and share them in full. This will make CGSE a model for multiple factor-trading platforms in Qianhai to learn from. On the other hand, we also hope that CGSE can use Qianhai as a bridge to further tap into the vast mainland market, leveraging the mainland’s strong industrial chains in gold and other precious-metals manufacturing to expand its own business.”

Director Zhang further pointed out that Shenzhen is a key hub in mainland China for gold production, processing, wholesale and retail. He expressed the hope that deeper cooperation between Shenzhen and Hong Kong would help build Qianhai into a precious-metals trading platform with pricing power and influence across the Asia-Pacific region, thereby optimising the industrial structures of both Shenzhen and Hong Kong. Qianhai will continue to promote financial-innovation policies, including pilot schemes for foreign-invested equity-investment enterprises and Qualified Domestic Limited Partnerships (QDLP), allowing eligible foreign and domestic enterprises to invest in onshore and offshore markets, expand cross?border lending and improve the legal framework in line with international standards.

In his speech, CGSE Chairman Mr. Haywood Cheung stated:

“Developing Qianhai represents a golden opportunity for the gold and silver industry. After a long process, with Director Zhang now leading the Qianhai Authority, a new landscape has emerged. The Director, municipal leaders and the central government all hope that Qianhai can serve as a platform for Hong Kong and a springboard for SMEs. By leveraging Qianhai’s ‘pilot and experimental’ policies, Hong Kong’s small and medium-sized enterprises will have a tremendous opportunity to connect with China’s gold and silver markets.”

CGSE has been approved to set up a gold warehouse in Qianhai, which is expected to be completed within about one and a half to two years, with capacity for 1,500 tons of gold. This bonded warehouse, located “within the territory but outside the customs boundary”, will benefit from tax incentives and help attract overseas investors to trade gold and other precious-metal products. CGSE will make full use of the Qianhai warehouse for physical delivery, in conjunction with the expansion of its mainland business.

Chairman Cheung also noted that as early as September this year, CGSE had signed an agreement with the Shanghai Gold Exchange on the “Gold Hong Kong–Shanghai Connect”. Subject to completion of software integration in the second quarter of next year, the platform is expected to become operational. Through Qianhai Chinese Gold & Silver Exchange Society, CGSE will be linked to the Shanghai Gold Exchange and, via compliant and lawful channels and 15 state-approved importing banks, gain access to the mainland market. CGSE will be able to report directly through customs to the Shanghai Gold Exchange, connecting products such as 9999-purity RMB kilo gold bars to both the international and main boards of the Shanghai Gold Exchange via this Hong Kong–Shanghai “through-train”.

Moreover, the “within-territory-but-outside-customs” framework will allow for gold leasing, create opportunities to earn spreads between offshore (CNH) and onshore (CNY) RMB exchange rates, and facilitate risk management. It is expected that this type of arbitrage-and-hedging model will attract increasing investor participation in the foreseeable future.

The conference concluded successfully, providing an effective communication platform for Hong Kong and international gold and silver dealers, as well as mainland jewellery and precious-metal enterprises. Looking ahead, CGSE will continue to act as a bridge for the industry, working together with all parties to create a bright future for the gold and silver markets.

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