China lowers gold trading threshold for small private investors
25/12/2006 17:20
Shanghai Gold Exchange (SGE) today lowered its trading threshold from one
kilogram to 100 grams, opening the market up to small private
investors. Industry experts believe the move will help diversify gold
investment channels in China and to standardize the market for gold
transactions. The SGE proposed in July last year the spot trading of gold by
private investors in cooperation with the Industrial and Commercial Bank of
China (ICBC). However, the one-kg threshold, with a market value of 160,000 yuan
(US$20,000), has turned off many private investors. The volume of spot
transactions by private investors in the first ten months, for instance,
accounted for just 0.57 percent of the total trade. Provisional Measures
Regarding Administration of Spot Trading of Gold by Private Investors published
by SGE stipulate a private investor can participate in spot trading and even
claim gold through all SGE financial members or other agents with approval from
the People's Bank of China. Cheng Fumin, president of the China Gold
Association, said sales of gold had risen since the beginning of the year as a
result of rising prices and the growing acceptance of gold as an
investment. Sales of gold bullion and gold bars account for one tenth of the
gold consumption gross in the country. "I think more investors will be
attracted to spot trading and there will be more transactions as the SGE opens
its doors wider," said Cheng. China's gold market is restricted to spot
trading for the time being, but the SGE has been developing derivatives such as
futures, options and investment funds.
Xinhua
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