Abstract

This paper examines the changes in the futures market and how Chinese companies have hedged in recent years. As is known to all, the world has experienced lots of events, such as the COVID-19 pandemic, the Ukraine Conflict, the economic recession, and the rising interest rate in the U.S. Under the risky circumstances, the foreign exchange market and commodity futures market have shown a larger volatility. During times of global economic turmoil, the investors in the financial markets are seeking opportunities to protect their investment portfolios and assets. Historically, the futures market can be seen as a safe haven for funds, mitigating losses caused by fluctuations in stock or commodity prices through proper hedging strategies. This paper analyses what the Chinese futures and spot markets are like and how Chinese companies use hedging tools to lock profits. Then, the paper gives suggestions and prospects for futures hedging and the development of markets.

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