China firm launches stock indices to tap into rush for safe-haven gold

CHINA’S biggest index provider launched on Wednesday (Nov 1) two gold-linked stock indices to cash in on surging demand for exposure to the safe-haven metal amid a slump in the local real estate market and volatile global markets.

The new indexes, launched by the China Securities Index, include shares of global gold miners such as Newmont Corporation and Barrick Gold.

“The indexes offer a new method beyond traditional strategies,” the government-backed index company said in a statement. “It provides the market with more tools to invest in the gold business, and can help households better manage their wealth.”

Spot gold has gained more than 8 per cent so far this year, rising to an almost six-month high of US$2,009 an ounce last week. In yuan terms, it is up more than 15 per cent for the year so far.

Miners, which typically pay dividends, have also seen their shares rise, with an index tracking China-listed gold miners up nearly 15 per cent, compared with an 8 per cent drop in the benchmark CSI300 Index so far this year.

“Gold is the brightest asset at the moment... promising much better returns than Chinese property or the broad stock market,” said Shihua Duan, general manager of Shanghai Changer Invest.

“Gold shines as a safe haven against the backdrop of the Ukraine war, economic woes and the Middle East conflict.”

The indices follow the launch of other Chinese gold-related investment products that offer exposure in a country where gold consumption in the first three quarters of 2023 climbed 7.32 per cent.

China Asset Management and Maxwealth Fund Management last month launched China’s first exchange-traded funds (ETFs) that invest in gold stocks. Another seven mutual fund companies have applied to launch similar products.

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“Buying the gold bar is the safest among so many investment choices,” said gold investor Jack Liu, who spent 230,000 yuan (S$43,053) on a gold bar in September. REUTERS