Re <<oz>>
HK post-covid reopening to mainland visitors looking good ... and HK absence of VAT on gold always looked good to mainlander visitors where they must pay 17.5% when buying same on mainland
scmp.com
Lunar New Year Chinese visitors to Singapore, Hong Kong help revive gold post-Covid
‘We have seen an increase in visitors … certain Chinese customers, who have not been buying from us for a long time, have resumed’, one trader said Gifts of gold at Lunar New Year are thought to bring luck to both giver and receiver. China is the biggest consumer and producer of the precious metal
The old days – customers flock to buy gold accessories in China’s Shanxi province in 2013. Photo: Reuters
The holiday season also arrived earlier this year, as it often falls in February. Beijing’s abrupt U-turn on zero-Covid in late December surprised many people and did not give them enough time to firm up travel plans before Lunar New Year.
Gold has long been considered a way to store and lock in value, and demand for it spiked in Asian markets in the initial months of the pandemic in 2020 because of a climate of uncertainty. But the bullion trade in Asian hubs crashed soon after China imposed travel restrictions.
“Lot of people stopped buying because they were experiencing financial difficulties,” said Seif, whose sales revenue in the first two weeks of January has already surpassed that of the entire month a year ago.
It’s not just retail buyers of jewellery, either – long term investors are also turning back to gold. The US Federal Reserve is expected to this year soften its aggressive rate increases, which could make returns on the precious metalhigher than on interest-bearing bonds.
A worker handles gold bars at a smelter in Australia. Photo: Bloomberg
Investors have also gravitated towards the precious metal because of its safe haven appeal due to geopolitical tensions such as the Russia-Ukraine war and the looming prospect of a global recession.
Investment bank Goldman Sachs expects gold to trend even higher than it is now later this year, at around US$1,950 an ounce.
Demand in China, the world’s largest gold consumer and also the biggest producer of the precious metal, is expected to have an important bearing on prices.
Chinese gold demand is expected to drive the global market this year - Spencer Campbell, SE Asia Consulting Pte Ltd Like Hong Kong, Singapore’s gold trade is also benefiting from China scrapping travel restrictions with the city state bracing for overall visitor arrivals to rise to 12-14 million, around double the year before.
“Chinese gold demand is expected to drive the global market this year,” said Spencer Campbell, the Singapore-based director of SE Asia Consulting Pte Ltd.
“With the easing of restrictions in China, retail demand for gold is expected to increase in Singapore and Hong Kong as more people shop for gifts and jewellery to celebrate the Lunar New Year.”
Demand has picked up across Asia since late last year, he added.
Indian consumers – in second place after their Chinese counterparts – bought a record amount of the metal in the fourth quarter of last year.
Some Asian investors have switched to precious metals from cryptocurrencies after one of the largest global exchanges, FTX, went bankrupt in November following a surge in customer withdrawals.
Bitcoin, one of the most actively-traded currencies that soared to an all-time high of US$69,000 in November 2021, is now trading at around US$21,000.
However, one Singapore-based fund manager appeared unimpressed by gold’s charms and said savvy investors can take advantage of cryptocurrency volatility, with traders buying at low prices and selling when they rise.
“Gold may be a safe haven” but there were many other opportunities elsewhere for investors “to profit from price fluctuations”, said Anndy Lian, a partner at the Singapore-based Passion Venture Capital and author of the book NFT: From Zero to Hero.
Bullion dealers have said the increased purchasing of gold following China’s reopening is likely to last until the end of the first quarter. Chinese appetite for gold could well continue at the same brisk pace throughout the year if the economy revives and incomes bounce back, they noted. |
