Soochow: The gold and jewelry industry is expected to see a significant recovery as it approaches a low base period.

Soochow released a research report stating that starting from Q2 2025, the gold jewelry industry is expected to see a low base period, with the industry at large likely to experience a more obvious recovery. The structure of the gold jewelry brand market is very stable, with a high brand power and barriers to entry. The franchise model requires low capital investment, has strong profitability and dividend distribution capabilities, and can sustain through cycles. Recommended stocks include Lao Feng Xiang (600612.SH), Guangdong CHJ Industry (002345.SZ), Chow Tai Seng Jewellery (002867.SZ), LAOPU GOLD (06181), Beijing Caishikou Department Store Co., Ltd. (605599.SH), China National Gold Group Gold Jewellery (600916.SH), CHOW TAI FOOK (01929), and others. In 2024, gold jewelry accounted for 44% of global gold consumption, while gold bar and coin consumption accounted for 26%: Global gold demand has fluctuated from 4406 tons in 2012 to 4554 tons in 2024, with an average compound annual growth rate of approximately 1.6%, maintaining stability. Specifically, from 2012 to 2024, the gold jewelry consumption share fluctuated between 44% and 55%, while gold bar and coin consumption fluctuated between 25% and 34%. Central bank gold purchases have increased to over 20% since 2022, and technology use gold demand has remained stable at over 20%. Mainland China and India are the main gold consumer markets globally, accounting for over 50% of total demand. The top five global gold consumption markets are Mainland China, India, the Middle East, the United States, and European countries. Mainland China and India's demand share is much higher than other markets, accounting for over 50% of total demand. Looking at the data over a longer period, since 2010, despite experiencing multiple fluctuations in gold prices, both Mainland China and India have maintained a high proportion of gold demand. Mainland China and India are the two largest markets for gold jewelry consumption globally, with a combined demand share close to 60% in 2024. Chinese consumers' preference for gold jewelry has remained consistent over cycles: In terms of gold jewelry, since 2021, Mainland China and India have further increased their consumption share of gold jewelry from the previous 35%-40% to close to 60%. Mainland China's market share has increased to 25%-30%, while India's market share has increased to nearly 30%. Chinese consumers' preference for gold jewelry can sustain through cycles.