Research On Hedging Risk Management Of Yunnan’s Nonferrous Metals Listed Companies

There is a rapid drift of money to bulk commodity due to the globalization of trade, heat-up inflation, overflowing, resource scarcity, as well as dollar depreciation. As a result, the financial features of the bulk commodity are increasing, which makes the enterprises face a lot of risks due to the fluctuation in bulk commodity futures price. Therefore, the risks of the price fluctuation from the hedging management, manufactured goods, and others became necessity. As the representatives, the nonferrous metal futures have been growing rapidly in recent years. Consequently, more and more nonferrous metal enterprises join the futures’market, which intensifies the hedging, and avoids the risks of price fluctuation.As can be seen from events of the large state-owned enterprise, such as "Zhuzhou Smelter","state-storage copper", and so on, the management for the hedging risk is incomplete. Besides, there is insufficient appreciation of the importance of hedging. Thus, the risks always occurred in the trade of hedging. In the present study, we analyzed the current trade situation of four nonferrous metal listed companies in Yunnan province, and identified the assessed the risks of hedging trade. We divided the risk into three types:beforehand risk, concurrent risk and afterwards risk, from supervising and administering perspective. Finally, we proposed a comprehensive evaluation index.In the present study, we proposed some suggestions based on identification and assessment of risk, for effectively evading of hedging transaction when the risk is controlled, predictable and bearable. These results are expected to provide guides for the supervision department, the strategy-makers, and the traders of hedging.