2010-11-03

Hong Kong gold fund

Thirteen months ago this was the story: Hong Kong Demands Delivery of Gold

Gold was pulled from London depositories and placed in a new depository at the airport. Now, the depository is generating business.

Hong Kong launches first local gold fund
The Value Gold ETF (HK:3081) , which debuted Wednesday in Hong Kong, is the first in Asia in which underlying holdings will be held locally instead of outside jurisdictions such as London.

Units of the fund will represent physical gold held at a high-security depository at the Hong Kong’s Chek Lap Kok Airport, according to managers of the fund, Sensible Asset Management HK, a joint venture between Ping An Insurance Group Co. (HK:2318) and regional funds-provider Value Partners.

“The whole reason to invest in a product backed by physical gold is that it doesn’t have counterparty risk,” Standard Bank’s John Wixley told MarketWatch in Hong Kong.

Wixley, the South African bank’s head of Asia markets, added: “Having that gold located locally makes it very secure, as opposed to having it in a vault in London with third parties that the investor might not be as familiar with.”

Standard Bank — which is 20% owned by Chinese lender Industrial & Commercial Bank of China (HK:1398) — is the main bullion provider to the fund and will also act as dealer and broker.
Notice that big mainland Chinese financial institutions are involved in the deal.

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