Hedging Spot Fuel Oil in Singapore: Will the New Simex Contract Succeed

Publication Type

Journal Article

Publication Date

1990

Abstract

We assess SIMEX's new market for fuel oil futures by examining its effectiveness in hedging a cash fuel oil position in Singapore. We find that the SIMEX contract can eliminate about two-thirds of the volatility of a Singapore cash position and is many times more effective than a cross-hedge constructed with overseas contracts. Given its potential usefulness as a hedging tool for the regional petroleum industry, we anticipate that the new contract will be a success.

Discipline

Business

Research Areas

Finance

Publication

Asia Pacific Journal of Management

Volume

7

Issue

2

First Page

97

Last Page

107

ISSN

0217-4561

Identifier

10.1007/bf01951482

Publisher

Springer Verlag

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