The Degree Of Mental Commodity Financialization

Accompany with the changing of global ecomonic environment and theadvancing of financial integration, financial derivatives have been developing rapidly.Commodity financialization has been a trend and tide, while the age background andindustry mode have been changing from purely manufacturing/planting tofinance+manufacturing/planting. The generalized commodity financializationincludes commodity futures, options, forwards, shares of listed companies related tocommodity industries, as well as price index fund which specilically pegged tocommodity. The most important part among them is commodity futures, ie thecommodity financialization in the narrow sense which is the main target of this study.The development of commodity financialization does good to the developmentof real ecomony, the improvement of capital market system and efficiency of capitalallocation, meanwhile, it promotes the financial competitive. The development ofcommodity financialization, especially the moderate development of commodityfutures markets plays an important role for hedgers to circument market price risk,fight against inflation, and lock in profits, at the same time, it’s of significant meaningfor investors to optimize the portfolio, diversify investment risks, improve the returnon investment, and to play a structured trade finance function. However, excessivecommodity financialization will make the entities supply and demand to secondarystatus. And the futures market price is more vulnerable to a financial investorspeculation, the commodity trading uncertainty rises, the price volatility increases, themarket risk amplifies, and the cost of hedging increases.The article designed a index system to estimate the degree of commodityfinancialization. It studies the interaction of futures and spot price, further more, theinfluence of the futures market, by empirically estimating the market prices relateddegree of the domestic zinc metal futures and spot market, the goodness of pricediscovery function of futures market, the impact degree of futures price on spotmarket. To study the influence of the risk of financial market system on prices bymeasuring the level of impact through crisis to prices.To emphasize on the fluctuation degree of real return rate on futures and futures market, further more, study the degreeof earnings volatility and risk size, by measuring the risk degree through the basisfluctuations.To study the speculative level by estimating the deviation degree betweenfutures prices and spot prices, besides the turnover rate. Comparing with the level ofmature market abroad, it defines the standard of low, moderate and heightfinancialization. And finally provides advice to the formulation of government policy,and the commodity hedgers and investors’ appropriate use of financial markets.