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Monday November 17, 5:24 am Eastern Time
Hong Kong gets gold fever amid stock turmoil
By Carrie Lee
HONG KONG, Nov 17 (Reuters) - Hong Kong investors, shying away from a choppy stock market, have got a dose of gold fever and are pouring into jewellers to take advantage of depressed prices, industry sources said on Monday.
''There's a gold fever now because the prices are low,'' said Kent Wong, administration manager at Chow Tai Fook Jewellery Co Ltd, one of the territory's best known goldsmiths.
''Sometimes there are so many customers that they need to wait to be served.''
Wong said the buying spree started in the middle of last month when gold prices fell sharply, boosting the company's sales by 100 percent.
Gold plunged from more than US$320 an ounce to below US$310 in October and has since stayed at low levels as sentiment remained frayed by fears that central banks will dump gold reserves, dealers said.
Gold closed at US$303.40/90 in Hong Kong on Monday.
''But people in Hong Kong habitually start buying when prices are low,'' said Emily Li, manager for Hong Kong and southern China at the World Gold Council, a body promoting the gold trade.
''Recently, gold prices are soft and more attractive. Therefore more people are buying gold,'' she said.
Sales at most gold accessory retailers were up 10 to 30 percent in the past two months, Li said.
Turmoil in the stock and property markets might also encourage some people to turn to gold instead, she said.
Hong Kong stocks have been buffeted by heavy volatility since a big sell-off last month sparked initially by speculative attacks on the local dollar's peg to the U.S. currency.
"To investors, gold is an investment tool," Li said.
Wong said some people, especially the elderly, thought gold was a safe investment and would keep its value.
''Also, the fourth quarter is always busier because many weddings take place at this time of the year. So people take advantage of the low prices to buy gold accessories,'' Li said.
Chinese brides traditionally wear gold jewellery at their wedding banquets.
But year-on-year sales were also up generally in Hong Kong's gold trade in the fourth quarter, market players said.
Chow Tai Fook saw growth of 60 to 70 percent in sales this month over the same period of 1996, Wong said.
Gold bullion houses, whose customers include manufacturers, have also reported sales increases in the past months.
''I estimate, as far as Hong Kong bullion market is concerned, sales were over 100 percent higher in November and October than in September,'' said a dealer at a local bullion house.
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