Shanghai Chaos spreads wings, opens office in Hong Kong
By Pratima Desai
LONDON, May 6 (Reuters) - Shanghai Chaos, one of China's largest commodities fund managers, has opened an office in Hong Kong to diversify activities and try to keep its commodities trading under the radar of the market, two sources with knowledge of the matter said.
Metal industry sources said the fund house plans to use a much larger number of banks and brokerages, of which there are many more in Hong Kong than in Shanghai, so that its positions are not easily identifiable.
The advantage of Hong Kong is the ability to use exchanges outside of China, which mostly only detail commodity positions by categories such as financial and non-financial, not by individual firms.
The Shanghai Futures Exchange, which offers a wide range of products including copper, aluminium, zinc and nickel, lists positions by broker on its website.
"If you know which broker or brokers Chaos uses, it's not difficult to work out their positions," a broker source said.
The Hong Kong arm, named Chaos International Financial, opened its offices at the beginning of this year and has a very small staff, sources said. A one-page website: http://chaosinternational.com says "We're Hiring".
It is already registered with the Securities and Futures Commission of Hong Kong for dealing futures contracts.
A senior company official declined to comment and calls by Reuters to Chaos's administrative office in Shanghai were not answered.
Chinese funds have become increasingly influential in global financial and commodity markets in recent years and their activity has contributed to wild price swings, including a 12 percent collapse in copper prices in January 2015 and a 9 percent drop in July last year.
Chaos also plans to offer prime brokerage services to hedge funds, which want to borrow stocks or bonds to sell short -- bets on lower prices. Prime brokers also lend cash, offer clearing and risk management services to hedge funds.
Shanghai Chaos Investment was set up about 10 years ago and traders said it has 10 billion yuan ($1.5 bln) under management.
($1 = 6.4980 Chinese yuan renminbi) (Additional reporting by Ruby Lian in Shanghai and Vikram Subhedar in London; Editing by Veronica Brown and Susan Fenton)
