The first yuan-denominated gold ETF has made a lackluster debut on the Hong Kong stock exchange, but if analysts are correct it is just the beginning for the new vehicle.
Reuters reported that the Hang Seng RMB Gold ETF was launched by Hang Seng Bank Ltd. on Tuesday. It is intended to track the performance of the London gold fixing price in U.S. dollars. With few products denominated in yuan available in the Hong Kong market, Hang Seng Bank pointed out that the new ETF offered a means for investors to use yuan to enter the gold market.
Analysts say unfamiliarity with the new ETF is responsible for its less-than-spectacular showing on its debut. Hou Xinqiang, a gold analyst at Jinrui Futures in China, was quoted saying, “It will take time for investors to understand the product before they jump in. Besides, Hong Kong has a lot of gold investment products and the market is already very savvy, so investors will probably take some time to assess its selling point.”