Considering how long I’ve been working in financial services, you’d think that one way or another I will have, at some point, covered most internationally traded commodities, stocks, bonds and derivatives. Yet every now and then something or someone alerts me to an area that’s not on my radar. Writing for the South China Morning Post has sharpened my focus on all things Chinese.
Imagine my surprise to find that in Zhengzhou, a city of 9.5 million people on the Yellow River in Henan province (I had to look it up on a map app), they have a thriving commodities exchange. I’ve been covering Shanghai and Dalian for some time, as well as their stock exchanges and assorted other futures markets.
Bliss! New toys to play with. I duly added these instruments to my template of charts: candles, clouds, volume and open interest, historical volatility, moving averages and a few oscillators for good measure. I find it useful having a standardised set up so I can easily compare across asset classes and between the currencies in which they are denominated.
The Zhengzhou Commodity Exchange currently lists 17 different futures contracts, different being the operative word. Some barely trade, but with names like Indica, Japonica, and early long grain nonglutinous rice, you’ve got to smile.
The busiest ones include white sugar, which is nice to compare with ICE charts, and rapeseed oil, again useful to compare with North American canola. But the two busiest, both in terms of volume and open interest, are methanol and terephthalic acid. Yes, I had to Google that too! Wikipedia tells me it’s an organic compound of the turpentine-producing tree terebinthus and phthalic acid, is a precursor to polyester PET, and is used for making millions of tonnes of those ghastly plastic bottles. By the way, Borough Market plans to ban the sale of these within the next 6 months.
But the best thing about working with brand new charts is that one can approach them with truly fresh eyes and no preconceived ideas. Technical analysis at its most pure. Another way to achieve this is to ask friends for suggestions as to which company shares you should look at, then pick the unknown.