China’s largest index provider launched two gold-linked stock indexes on Wednesday to tap rising demand for exposure to the safe metal amid a local property market collapse and volatile global markets.
The new indexes, launched by China Securities Index Co, include shares of global gold mining operators such as Newmont Corporation and Barrick Gold.
“The indexes provide a new methodology that goes beyond traditional strategies,” the government-backed index company said in a statement. “It provides the market with more tools to invest in the gold sector and can help households better manage their wealth.”
Spot gold is up more than 8% so far this year, hitting a nearly six-month high of $2,009 an ounce last week. In yuan terms, it is up more than 15% year to date.
Miners, who usually pay dividends, have also seen their shares rise, with an index tracking Chinese gold miners up almost 15%, compared with an 8% decline in the benchmark CSI300 Index so far this year.
“Gold is the brightest asset right now… with much better returns than Chinese real estate or the stock market in general,” said Shihua Duan, general manager of Shanghai Changer Invest.
“Gold shines as a safe haven against the backdrop of the war in Ukraine, economic problems and the conflict in the Middle East.”
The indexes follow the launch of other Chinese gold-related investment products offering exposure in a country where gold consumption rose 7.32% in the first three quarters of 2023.
China Asset Management Co and Maxwealth Fund Management Co last month launched China’s first exchange-traded funds (ETFs) that invest in gold stocks. Another seven mutual funds have applied to launch similar products.
“Buying a gold bar is the safest among many investment choices,” said gold investor Jack Liu, who spent 230,000 yuan ($31,425) on a gold bar in September. ($1 = 7.3190 Chinese yuan renminbi) (Reporting by Jason Xue and Samuel Shen in Shanghai and Summer Zhen in Hong Kong, and Beijing Newsroom; Editing by Miral Fahmy)