How To Trade A Donkey

From Livestock To Flowers, Exchanges Are Popping Up Everywhere In China. So Is Speculation 

"Spawned From Needs In The Real Economy"

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Chances are, if you can buy it or sell it, China has an exchange for it. The latest example? The China Donkey Exchange. It’s one of more than 1,000 trading venues that now dot Asia’s largest economy, up from 300 in 2011, according to SunSirs, a provider of data and research on Chinese commodity markets.

The country has everything from the national stock exchanges in Shanghai and Shenzhen to small operations that consist of little more than software for matching buyers and sellers. But regional trading venues are becoming ever-bigger players. Helping determine prices for agricultural products, metals, and chemicals, they now cover 32 of China’s 34 provincial-level regions. An orchid exchange began operating in Yunnan province in September, and a market for small-company shares opened in Ningbo in May.

Properly run exchanges “are beneficial to the development of China’s markets,” says Hao Hong, chief strategist at Bocom International Holdings Co. in Hong Kong. But the rapid increase and sheer number of trading platforms have also raised concerns about patchy oversight. “Many of the exchanges started as a place of hedging but evolved into a place of speculation, which in excess brings no obvious benefits to the real economy,” Hong adds.

The donkey exchange was born for much the same reason hog and soybean futures are traded around the world. Donkeys in China are not just beasts of burden, but an agricultural commodity. A traditional treatment for anemia known as