MARKET REVIEW OF THE SGE IN 2002

From its official opening on October 30, 2002 until the year-end, the Shanghai Gold Exchange enjoyed a trading volume of 21,246 kilograms in 45 trading days with a total of RMB1.869 billion yuan. The average daily turnover reached 472.13 kilograms. The trading price of Au99.95 ranged from RMB82.5 to 93.26 yuan per gram with an average weighted price of RMB88.2 yuan per gram. Au99.99 was traded at prices between RMB82 yuan and RMB94.8 yuan per gram with an average weighted price of RMB86.82 yuan per gram.

The settlement volume amounted to RMB3.546 billion yuan, among which the members' principal business and agency business were RMB2.996 billion yuan and RMB550 million yuan respectively, accounting for 84% and 16% of the total. Both the settlement deals and the margins of the members saw a gradual rise, with a daily average of 200 deals and RMB200 million yuan respectively.

The gold market witnessed sound operation. Firstly, the market transaction, storage and settlement systems performed smoothly. The day-end management of storage and settlement was accurate and timely, and the delivery realized T+0. Secondly, the market price of gold began to take shape and play a role in allocating gold resources through the market. Thirdly, many members became acquainted with the market operational pattern and gradually accepted the operational rules of the SGE.

However, some problems also existed. Firstly, some members were still not familiar with the operational function of the SGE. About one third of the members did not make transactions in the market. Many enterprises wanted to participate in gold trade, but could not enter the market directly. These problems hindered the increase of the trading volume. Secondly, members' agency businesses had not been developed sufficiently. Market participants are limited to enterprises with practical demand for gold, and so trading was slack. To solve the above mentioned problems, the SGE will prioritize the exploration and promotion of the market, so as to attract more members and clients.

(by the Shanghai Gold Exchange)