Demystifying Financial Speculation in Commodity Future Markets of Emerging Economies

Abstract

Present study focuses on comparing financial speculation on commodity future markets of China and India. Two agricultural products and two metal products were chosen from both countries for the present study. Utilizing a comprehensive dataset spanning over twenty years, we employ quantitative methods to measure the hedging and speculative ratios within Chinese and Indian commodity future markets. Relevant results and visual representations were extracted using EVIEWS. Outcome of the study demonstrated that Indian commodity future markets are more speculative than Chinese commodity future markets both in cases of agricultural and metal products. The results will provide valuable implications for policymakers and market participants aiming to compare financial speculation in commodity markets vis-à-vis emerging economies like China and India. Additionally, the outcomes of this study are particularly relevant for market players, and policymakers to comprehend the mind-set/behavioural pattern of investors trading in Chinese and Indian commodity future markets.