UPDATE 2-Tokyo bourse says to list first gold ETF
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TOKYO, June 13 (Reuters) - Japan's largest bourse plans to launch the nation's first bullion-backed, gold exchange-traded fund on June 30, in a bid to draw more investors and help enhance Tokyo as a financial centre.
The Tokyo Stock Exchange [TSE.UL] said on Friday that it will offer the SPDR Gold Shares ETF, which is sponsored by a subsidiary of the World Gold Council and whose marketing agent is State Street Global Markets (STT.N).
It is currently traded on the New York Stock Exchange as well as bourses in Mexico and Singapore.
The Tokyo bourse has been studying the possibility of listing such ETFs as a means of offering a broader variety of listed financial products and attract more investors.
Friday's move was welcomed by Japanese market participants.
"Many investors have been waiting for this launch for a while. It will draw a lot of attention from investors," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management.
The Tokyo bourse had been waiting for a new legal framework. A bill passed by Japan's parliament last week allowed for the creation of ETFs for commodities, and made it possible for banks and other firms to engage in emissions trading.
"It's difficult to tell whether this (the ETF) will be an instantaneous hit product or not, but the launch in Japan will provide overall support for the market," said Kageyama.
He said the ETF could draw strong interest from both retail and institutional investors.
Japanese investors, keen to diversify their portfolios from conventional stocks and bonds, have been searching for other financial instruments that will help bring in higher returns.
However, recent declines in global bond prices have limited their investments in the risky commodities market.
"ETFs, which are backed by physical gold, should attract demand, but investors may not be able to take a large risk investing in commodities when bond prices are falling sharply around the world," an analyst at a Japanese trading house said.
MORE INFLOWS IN ETFs
ETFs have been a factor shaping recent global market moves.
Changes in gold and silver ETF holdings are closely watched by market participants because sharp inflows in gold ETFs could be a bullish signal as it shows longer-term retail investors are entering the market.
"There's still ongoing investment demand from long-term precious metals investors in Asia. ETF is easy to buy and easy to sell," said William Kwan, bullion director of Gold Capital Management in Singapore.
"More inflows of funds will go into metals and it will drive up more demand and suck up more supply. There will be more investment demand and the supply is definitely limited," he said.
Although bullion prices have fallen from the all-time high of $1,030.80 per ounce marked on March 17, they remain about 30 percent above year earlier levels at around $870 XAU=.
Japan's first ETF tracking a gold price index was launched on the Osaka bourse, Japan's second biggest, in August 2007.
Although this is not backed by physical gold, but structured bonds, it has attracted a lot of investor interest, analysts said.
Gold-backed ETFs allow investors to buy the metal on a stock exchange without taking physical delivery of the metal, luring retail and institutional investors usually reluctant to trade in commodities.
SPDR Gold Shares is the world's largest gold-backed ETF. The one listed in New York (GLD.P) XAUEXT-NYS-TT held 605 tonnes of gold as of Friday in bank vaults on behalf of investors. (Reporting by Chikafumi Hodo, Risa Maeda and David Dolan in Tokyo, and Lewa Pardomuan in Singapore; Editing by Brent Kininmont)
