China suspended trading of five commodity funds on Friday to curb investment mania in gold, silver and oil and reduce underlying risks amid geopolitical tensions.
The only public fund investing in silver futures in mainland China, UBS SDIC Silver Futures Fund, a listed open-ended fund (LOF), will be suspended for the whole day on Friday, the second such halt since January 22.
The trading halt also spread to oil LOFs, four of which were halted for an hour up to 10.30am on Friday. Before the halts, fund-management firms had issued multiple alerts about high premium risks.
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The actions came as global investors continued to flock to safe-haven assets amid escalating US conflicts with Europe, South America and the Middle East.
The prices of gold and silver broke records multiple times this month, nearing new all-time highs of US$5,600 and US$122 per ounce, respectively, on Thursday in New York. Gold and silver have surged more than 22 per cent and 58 per cent, respectively, in the past 30 days.
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Brent oil also exceeded US$70 per barrel for the first time in about five months on Thursday as US warships headed closer to Iran.
“The expanded trade tensions intensify the price volatility of commodities, reflecting weakening confidence in US dominance and the greenback, and tightened control over strategic resources,” said Xu Tianchen, senior economist at the Economist Intelligence Unit. “China’s trading halt and alerts aim to maintain the stability of the capital markets, preventing investors from suffering huge losses.”
