The world is feeling the might of China's commodity traders

The Chinese speculators shaking up global commodity markets are switched-on, flush with cash and probably not getting enough sleep.

For the second time this year, trading has exploded on the nation's exchanges, pushing prices of everything from zinc to coal to multi-year highs and sending authorities scrambling to deflate the bubble before it bursts. Metals brokers described panic earlier this month as the frenzy spread to markets in London and New York, prompting wild swings in prices that show no signs of abating.

While billions of yuan have poured in from herd-like Chinese retail investors who show little regard for market fundamentals, brokers and traders say even more is coming from an expanding army of deep-pocketed hedge funds. They're chasing better returns in commodities as stocks and real estate fade, often using algorithms and trading late into the night, when markets in London and New York are most active.

"There is no doubt that the price moves and the bigger volumes worldwide are being driven by the Chinese, and by professional speculators and financial players," said Tiger Shi, managing partner at brokerage BANDS Financial Ltd., which counts several of those funds as clients. "The Western hedge funds and institutional investors don't really know what's going on. Often they were used to trading macro factors or Fed policy, but now they find they have fewer advantages." ...

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