China's first gold ETFs raise $261 mn, below expectations
China - the second biggest consumer of gold jewellery, bars and coins after India - approved the ETFs last month, giving the go-ahead to HuaAn Asset Management and Guotai Asset Management.
July 20, 2013 / 13:51 IST
China's first two newly launched gold exchange-traded funds have raised a total of 1.6 billion yuan in their initial funding round, coming in below expectations due to sliding gold prices and a recent credit-crunch scare.
The launch of China's first gold-backed ETFs is being closely watched to judge local investors' appetite for paper gold in a country where physical bullion is in great demand for weddings, gift-giving and as an investment tool.Also Read: Commodity hedge funds bear longest losing streak on recordChina - the second biggest consumer of gold jewellery, bars and coins after India - approved the ETFs last month, giving the go-ahead to HuaAn Asset Management and Guotai Asset Management.Unfamiliarity with the product and the credit crunch in China caused the lower-than-expected funding, Guotai's gold-fund manager Yang Xuwei told Reuters.HuaAn raised 1.21 billion yuan, while Guotai raised about 410 million yuan in the first round of funding that closed last Friday, the two companies announced on their websites.HuaAn had told Reuters in June that it expected to raise between 2 billion yuan and 3 billion yuan.Gold-backed ETFs are a relatively new concept in Asia, where the demand for physical bullion is unmatched worldwide.The ETFs were launched at a time when gold has lost nearly a quarter of its value so far this year after 12 straight annual gains, with investors selling down holdings in gold-backed ETFs in other markets.Outflows from gold ETFs have amounted to USD 28.2 billion year-to-date, according to data from BlackRock, the world's largest asset manager.Holdings in SPDR Gold Trust, the world's largest gold ETF, are near four-year lows. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
