New tax policies may lead to pressure on short-term physical demand, but medium- to long-term demand remains unaffected.
Today, Hong Kong-listed gold mining stocks and gold jewelry stocks plummeted across the board. As of the time of writing, $LAOPU GOLD (06181.HK)$ dropped more than 8%, $CHOW TAI FOOK (01929.HK)$ Dropped more than 7%, $CHINAGOLDINTL (02099.HK)$fell over 6%, $SD GOLD (01787.HK)$ dropped over 5%, $ZIJIN MINING (02899.HK)$ Dropped more than 4%.
In terms of news, the Ministry of Finance and the State Administration of Taxation issued an announcement regarding taxation policies on gold. According to a report by Yicai, “there were ambiguities in the taxation of gold transactions in the past, such as some high-premium jewelry being packaged as investment products to evade taxes, or standard gold bars facing tax burdens due to complex circulation processes.” An industry analyst of precious metals stated that the new regulations separate two types of gold through a dual standard of “purity + function,” essentially suppressing speculative arbitrage in the gold market while lowering the cost of compliant investments.
Huatai Futures released a research report stating that in the short term, this policy may push up gold prices, putting pressure on physical demand. However, in the long run, after gold investment becomes more standardized, its financial attributes will be enhanced, making it more akin to an asset, which is conducive to institutional holding and elevates the status of the gold market. Against the backdrop of global financial system turbulence, medium- and long-term demand will not be suppressed by this tax regime. Additionally, the increase in the cost of holding gold might prompt wealth transfers from households to the real economy or stock market, further stimulating economic growth.
Editor/KOKO
