HK Stock Market Move | Gold mining stocks and gold jewelry stocks all fell sharply. The new gold tax policy may put pressure on short-term physical demand, but will not affect medium to long-term demand.

Gold mining stocks and gold jewelry stocks all saw a sharp decline. As of the time of writing, LAOPU GOLD (06181) fell by 8.04% to HK$629.5; CHOW TAI FOOK (01929) fell by 6.18% to HK$14.28; Shandong Gold Mining (01787) fell by 4.53% to HK$31.22; CHINAGOLDINTL (02099) fell by 5.86% to HK$123.7; ZIJIN MINING (02899) fell by 3.41% to HK$31.14. In terms of news, the Ministry of Finance and the State Administration of Taxation issued an announcement regarding tax policies related to gold. According to reports, there were previously unclear areas in gold trading taxation, such as some high premium gold jewelry being packaged as investment products to avoid taxes, or standard gold bars passing through complex circulation channels leading to tax shifting. An analyst in the precious metals industry stated that the new regulations aim to cut down on speculative arbitrage in the gold market by dividing gold into two categories based on "purity + function", ultimately reducing the cost of compliance for investments. Huatai Futures released a research report stating that in the short term, this policy may push up gold prices and put pressure on physical demand; however, in the long term, after standardizing gold investments, its financial attributes will be enhanced, making it more similar to an asset, which will benefit institutional investors holding gold in a compliant manner and elevate the status of the gold market. In the backdrop of global financial system instability, the medium to long-term demand will not be suppressed by this tax system. Additionally, further increasing the cost of holding gold may prompt residents to shift their wealth towards the real economy or stock market, further stimulating the economy.