Date
20 November 2017
Protesters occupy an area outside a top Hong Kong jewelry store. The protests likely dampened gold buying in Hong Kong by mainland Chinese. Photo: Reuters
Protesters occupy an area outside a top Hong Kong jewelry store. The protests likely dampened gold buying in Hong Kong by mainland Chinese. Photo: Reuters

Hong Kong losing gold luster to Shanghai

Hong Kong is losing ground to Shanghai as a gateway to China’s vast gold market, according to the Wall Street Journal.

Shanghai is looking to import gold directly from the rest of the world, bypassing Hong Kong, after it opened its own vaults and began to trade in yuan-denominated gold futures.

Last year, mainland China imported about 1,175 metric tons of gold through Hong Kong but that amount will drop this year, the report said, citing Roger Liu, Hong Kong-based director of investment at The World Gold Council (Far East).

Liu said the month-long pro-democracy protests in Hong Kong have likely dented recent gold buying by mainland tourists.

The protests disrupted some of the city’s main shopping districts, beginning with China’s national holiday week at the start of October, one of the biggest shopping periods of the year.

Traders and surveys said sales of most jewelry retailers have taken a hit, although precise numbers are unavailable. A spokesman for Chow Tai Fook, a leading Hong Kong jewelry retailer, declined to comment.

China accounts for about a third of the world’s gold demand and any change in its gold consumption is keenly watched.

Some of the recent softness in demand is a result of falling prices making investors less bullish toward gold generally.

The drop in gold handled through Hong Kong mostly reflects China’s decision to open new import channels through Shanghai and Beijing, traders said.

Shanghai has set up bullion vaults in a free-trade zone that will enable importers to send gold directly to the mainland.

In September, it launched trading in yuan-denominated gold futures, which should help boost the city’s role in the gold trade.

Gold imports to China via Hong Kong fell 33 percent on year during the first eight months of 2014, said Ryan case, Brisbane-based head of institutional sales for Bullion Capital, a gold exchange.

“Hong Kong’s role as the primary means of importing gold into China has been greatly reduced,” he said.

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