Two Chinese money managers – Huaan Asset Management and Guotai Asset Management – have received approval from the China Securities Regulatory Commission to start their own first gold-backed exchange-traded funds (ETFs).
The companies did not provide information on when they expected to offer gold ETFs to investors.
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The ETFs would trade like stocks on the Shanghai Stock Exchange and would be denominated in yuan, an arrangement similar to the existing dollar-denominated gold ETFs in the US, reported Huaan Asset Management.
The Chinese gold ETFs would buy prompt-delivery gold futures contracts on the Shanghai Gold Exchange on behalf of investors, which would give them exposure to gold prices in the domestic market.
US and European ETFs when compared to Chinese gold ETFs buy bullion for each share sold and store the gold in vaults.
Managing director, World Gold Council, Albert Cheng said: "The listing of these products in China will help to broaden the choices available to savers. We have shared our expertise in developing these products with a number of interested parties in China, and we look forward to the popularity that these funds have achieved elsewhere being replicated in one of the world’s largest markets."
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By GlobalDataPrior to gold ETFs, investors interested in gold could either pay the relatively high fees for trading futures or buy physical bullion and bear storage costs.
According to UBS, such funds have sold about 429 metric tons of gold in 2013, equivalent to roughly 15% of annual gold mine production.
In January 2013, the China Securities Regulatory Commission released rules governing gold exchange-traded funds, specifying that such products are to be invested in spot gold contracts on the Shanghai exchange as well as other contracts authorised by the regulator.
