Bonds, Currencies, Emerging Markets, Metals, Stocks

BRICS Single Capital Market Possible In 5 Years, Russian Central Bank Deputy Gov Says

brics-photo-courtesy-of-the-russian-international-affairs-council-riacThe Creation of a single capital market of the BRICS grouping of emerging market nations — Brazil, Russia, India, China, and South Africa — is possible in the next five years, Sergei Shvetsov, First Deputy Chairman of Russia’s central bank told Russia’s TASS news agency during his visit to China.

“We understand that it is better to use the international standards, which could be supported by investors from China and Russia, as well as other investors, including the BRICS. Our goal is to unify the rules, disclosure of accounting, which gives us the opportunity to create access to the stock market for a wide range of participants. It is a very interesting idea, originally proposed by Brazil, the creation of a single capital market for the BRICS countries, like that of the EU,” said Shvetsov.

“I think that five years would be enough time, we also plan the most appropriate form of cooperation to attract support from New Development Bank (BRICS Bank),” said Shvetsov.

The Central Banks of Russia and China are also looking to dominate gold trade with the creation of a joint platform that would unite gold trading by the world’s two biggest gold buying countries.

“BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets,” Sergey Shvetsov, First Deputy Governor of the Russian Central Bank told Russia’s TASS news agency.

Furthermore, China has just recently launched its gold benchmark denominated in yuan and plans to exert a stronger influence in the global market by better controlling the prices. It will also serve to increase the international credibility of its currency.

Eighteen market makers are participating in the fixing of the new Shanghai benchmark, according to the operator, most of which are Chinese state-owned banks, but two are large Chinese gold groups and two are foreign banks, ANZ and Standard Chartered.

“The fixing (that started Tuesday) marks a new step in the impressive soaring of Chinese exchanges and reflects the next stage of the internationalization of China’s gold market. It is a stepping stone to a new multi-axis trading market consisting of London, New York and Shanghai and signals the continuing shift in demand from West to East,” said Aram Shishmanian, CEO of the World Gold Council, an association of the world’s leading gold producers.

“As the market expands to reflect the growing interest in gold by Chinese consumers, so too will China’s influence increase on the global gold market,” he added in an e-mail transmitted to AFP (Agence France-Presse).

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