WITH the price of gold again approaching the peak it hit in March last year, Hong Kong investment firms are wooing mainland speculators to invest in the yellow metal, but analysts warn that investing through Hong Kong firms is associated with high risk.
A Hong Kong investment firm recently set up branches in Shenzhen and Shanghai and started recruiting brokers, according to yesterday’s China Securities Journal, which did not name the company.
A broker at the firm can earn at least US$20,000 to US$80,000 in commissions every month, according to a manager of the firm, who was identified only by his surname Zhang. With a gold trading license, the firm encouraged potential investors to visit its headquarters in Hong Kong to verify the credibility of the company, Zhang said.
“There are only about 190 firms in Hong Kong that hold gold trading licenses, and it costs HK$6 million (US$774,000) to HK$7 million to obtain such a license,” Zhang said. A licensed company wouldn’t risk losing its license by swindling money out of small-time mainland investors, he said.
Zhang said that “quite a few” Shenzhen investors have bought gold through his firm.
A large number of other Hong Kong investment firms are also seeking mainland investors through online advertisements and presenting lectures to the public on investment techniques, the report said.
Some mainland companies, which claim to be the sales agents of Hong Kong firms, are also offering the service, the report said.
A mainland investor needs to open a bank account in Hong Kong and can trade gold online after transferring money into the account, but analysts warned investors of the high risk of losing money.
Some Hong Kong firms without gold trading licenses may swindle money out of mainland investors. In addition, even if a Hong Kong firm has a legitimate gold trading license, an investor here isn’t protected by mainland laws, said Wang Ruilei, an analyst with CGS Ltd., a Chengdu-based investment firm.
The price of gold, which breached the psychological barrier of US$1,000 an ounce last week, may surge another 10 to 20 percent to US$1,200 an ounce by the end of this year or early next year, Wang said. He suggested Shenzhen investors turn to reliable mainland banks or investment companies for gold trading. (Liu Minxia)