Beijing, Oct 18: China's four biggest state-owned banks, which account for about 80 per cent of the nation's loans, are seeking approval to trade gold on the Shanghai Gold Exchange on behalf of individual investors in an effort to boost revenue. World gold council officials in Beijing are helping the banks prepare to expand the scope of gold trading in China as the government opens the market to competition, said Yang Qing, the Beijing-based head of commodities trading at Bank of China. Currently, only domestic banks and producers can trade gold on the exchange.
"This would be a low-risk business growth area for the commercial banks, and would also benefit individuals by giving them more investment alternatives," Yang said.
Local Chinese starved of opportunities to invest their 23 trillion Yuan (148 billion dollar) in savings may rush to buy and sell gold through domestic banks. About 90 per cent of the 213 tons of gold consumed each year in china is used to make jewellery. The remaining is used in dentistry or to make mobile phones, computers and other electronic goods.
"China's stock market has been bearish for a while, and banking deposits offer meagre interest, so many individual investors would likely be attracted to gold as a hedge," said Roland Wang, a Beijing-based regional manager of the world gold council.
Bureau Report