gold trading starts in china....

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    Story Filed: Monday, December 23, 2002 3:53 AM EST

    Beijing, Dec 23, 2002 (XFN via COMTEX) -- Chinese individuals are expected to be allowed to join China's gold market early next year, and there could be a strong incentive for mainland Chinese to shift some of their savings to gold, UBS Warburg said.

    China's first gold market, the Shanghai Gold Exchange, formally opened on October 30 and currently has 108 member companies.

    Vincent Chan, Head of China Economics and Strategy at the investment bank in Hong Kong, said in a research report that the gold market will be attractive to Chinese retail investors given the current low interest rates, weak stock markets and recent strength in gold prices.

    "Interest rates are becoming very low with the rate for Chinese yuan savings deposits at 0.72 percent, US dollar savings deposits at 0.125 percent and even Chinese yuan one-year term deposits at only 1.98 percent," the report said.

    "The stock markets are not looking good," it said.

    Global gold prices are rising, it said, adding, there could be a strong incentive for mainland Chinese to shift some of their savings deposits to gold.

    "It is likely that foreign investors will take this this as a reason to further chase up the price of gold. This might in turn become an interesting self-fulfilling process to push gold prices higher," it said.

    On December 18, Beijing started to sell gold bullion to individuals at some commercial department stores in the city. This is the first time that gold bullion has been made available to Chinese individuals as an investment option since 1949.

    The China Daily quoted experts and individual investors as saying on December 19 that the sale of gold in this manner was regarded as a milestone for China in providing another investment avenue for the public.

    -- Linda Zhou in the Beijing newsroom at (86-10) 6515-5015 ext. 52, or [email protected]

    By Staff Reporter

    (C) 2002 XFN, Inc. All rights reserved.

    KEYWORD: China
    SUBJECT CODE: Finance

    Copyright © 2002, Xinhua Financial News, all rights reserved
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