China Property Softening Fuels Gold Demand-JPMorgan
Thu Apr 14 21:47:54 2011 EDT
0147 GMT [Dow Jones]The slowdown in China's property market, being directed by Beijing to rein in housing affordability issues, is driving gold demand by the country's "mass affluent", argues JP Morgan's China equities and commodities MD Jing Ulrich. This group "has seen its investment options sharply affected by restrictive housing measures" such as property taxes, increases in down-payment requirements, and raised interest rates, "since these households possess sufficient capital to purchase investment property, but do not have the same degree of access to investment vehicles such as private equity funds and retail property" as the super-rich, she says, adding that equities, gold and alternative property investments are therefore the key beneficiaries. "Chinese demand for gold jewelry increased 13.5% (on year) in 2010, while demand for bars & coins rose 70.5%. Most market participants expect that China's gold demand could grow at a still-stronger pace in 2011," she notes. At 0137 GMT, spot gold is at $1,476.20/oz, off its earlier record peak.
(END) Dow Jones Newswires