HK Stock Market Move | LAOPU GOLD (06181) drops over 3% as precious metals recently come under pressure; Citi expects it to increase discounts, weighing on gross margin.

LAOPU GOLD (06181) fell over 3%, down 2.92% as of press time, at HK$352.2, with a turnover of HK$299 million. On the news front, the September Federal Reserve interest rate meeting voted 12:0 to raise rates by 25 basis points, restarting the rate hike process, and combined with hawkish remarks from several Fed officials including Musalem and Goolsbee after the meeting, this weighed on precious metals valuations. In addition, a Citi research report pointed out that during LAOPU GOLD's third-quarter mall promotional activities, it offered price discounts of 15% to 20%, higher than the previous 10%. As old-model products account for the majority of sales, the bank expects an additional 9% discount to be offered in the third quarter. Assuming cost of goods sold remains unchanged, gross margin is expected to drop from 47% in the second quarter to 41.8% in the third quarter.