First gold miners ETF launches in Hong Kong

A gold miners exchange traded fund (ETF), a first in Hong Kong, was launched on the Hong Kong Exchange & Clearing (HKEX) today, Friday November 18.

The ETF – known as “XIE Shares FTSE Gold Miners ETF” – invests in a basket of physical equities and replicates the FTSE Gold Mines Net Tax Index, which currently represents 35 global gold mining companies that produce a minimum of 300,000 ounces of gold per year. Some of the countries represented in the ETF include Canada, US, South Africa, and Australia.

The Gold Miners ETF meets increasing investor demand for gold investing in light of a loss in confidence in paper money, caused by the increasing debt of developed countries, said Enhanced Investment Products (EIP), whose ETF business XIE Shares launched the ETF.

This debt, and recent political events such as Brexit and the US elections, point to more volatility and uncertainty in financial markets, and gold provides a hedge against inflation or deflation and is a store of value, EIP said in its statement.

“This new product…will enable retail and institutional investors to capitalise on gold price fluctuations through the ownership of gold mining stocks, which tend to go up and down more than the price of gold, given the size of their gold deposits relative to their market capitalisation. This year, gold mining stocks are outperforming physical gold by approximately 50%,” EIP’s ceo Tobias Bland said.

EIP is a Hong Kong-based investment management firm which was established in 2002. Brokerage and investment group CLSA acquired 49% of the XIE Shares Hong Kong ETF platform in 2014.

Net inflows into exchange traded products (ETP) have helped drive a sharp increase in gold investment demand this year, according to the World Gold Council (WGC).

Total gold investment demand rose 44% year-on-year to 336 tonnes in the third quarter of this year, with ETP inflows accounting for 146 tonnes as investors continued to build up their strategic allocations to gold, the WGC said in its report in November.

The spot gold price has risen around 30% since the beginning of this year to reach as high as $1,375.25 in July. The price has since pared to $1,205 per oz recently on Friday, but is still higher than the low of $1,062.40 reached at the beginning of this year. 

 

Editing by Archie Hunter

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