Feb 14 The world's first yuan-denominated
gold exchange-traded fund (ETF) made a weak debut on the Hong
Kong stock exchange on Tuesday, but analysts said demand would
likely pick up as investors became more familiar with the
The Hang Seng RMB Gold ETF, launched by Hang Seng
Bank Ltd, is intended to track the performance of the
London gold fixing price in U.S. dollars.
It was flat at midday at 35 yuan (US$5.60), with 30,000
units exchanging hands. Each board lot of the ETF is 100 units.
Spot gold edged lower on the day, tracking a weaker
euro, but has gained nearly 10 percent so far this year. It
posted a similar gain in 2011.
With a limited range of yuan investment products in the Hong
Kong market, Hang Seng Bank said its yuan-denominated gold ETF
provided a new choice for the city's investors to get into gold
by using their yuan holdings.
"It will take time for investors to understand the product
before they jump in," said Hou Xinqiang, a gold analyst at
Jinrui Futures in China.
"Besides, Hong Kong has a lot of gold investment products
and the market is already very savvy, so investors will probably
take some time to assess its selling point."
China has been stepping up efforts to boost the use of its
currency in cross-border trades and Hong Kong is fast becoming a
major offshore yuan trading centre.
Betting on growing appetite for offshore investments in the
yuan as well as the Chinese's cultural affinity towards gold,
banks and exchanges in Asia are working feverishly to launch
more bullion-related investment products priced in yuan.
The Shanghai Gold Exchange is working on rolling out a
gold-ETF, while the Hong Kong Mercantile Exchange has also said
that it would soon roll out yuan-denominated gold and silver
China's Lion Fund Management, which last year launched the
country's first gold fund, also raised $500 million to invest in
gold-backed ETFs overseas.
Hong Kong has been at the forefront of the yuan's
internationalization efforts with yuan deposits in the city
reaching 588.5 billion yuan ($93.46 billion) in December last
year, according to data from the Hong Kong Monetary Authority
data showed last month.
($1 = 6.2971 Chinese yuan)
(Reporting by Fayen Wong in SHANGHAI; Editing by Kim Coghill)