Chinese investors are making a significant shift in their investment strategies, with reports indicating that they are moving away from gold and turning towards local equities. According to recent data from Bloomberg, China’s major onshore gold-backed exchange-traded funds (ETFs) have experienced net outflows of approximately 3.2 billion yuan (equivalent to nearly $450 million) this month.
Analyst Steve Zhou from Huaan Fund Management Co. suggests that Chinese retail investors are capitalizing on gains in the gold market and redirecting their investments towards local equities. The CSI 300 Index, which tracks the performance of the top 300 stocks on the Shanghai and Shenzhen Stock Exchanges, has seen a surge of nearly 5.5% in the past month.
Interestingly, while Chinese investors seem to be selling off gold assets, reports suggest that the Chinese government is quietly accumulating more gold than publicly disclosed. Market strategist Joseph Cavatoni from the World Gold Council highlights the debate surrounding whether the reported purchases by the People’s Bank of China (PBOC) accurately reflect its actual gold holdings.
Analyst Jan Nieuwenhuijs from Money Metals estimates that the PBOC’s gold reserves are likely double the officially reported figures. Nieuwenhuijs asserts that the central bank held 5,065 metric tons of gold at the end of 2024, in contrast to the reported holdings of 2,280 metric tons. The most recent data from the World Gold Council indicates that the Chinese government officially holds 2,296 tons of gold.
As Chinese investors pivot towards local equities and the government potentially amasses more gold than disclosed, the investment landscape in China continues to evolve. It will be interesting to see how these trends shape the market dynamics in the coming months.
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Image Credit: Midjourney