Gold imports by China, the world’s second-largest consumer of the precious metal after India, may increase as record jewelry demand outpaces domestic supply, the World Gold Council said.
China produced 340 metric tons of gold last year and consumption was about 700 tons, leaving a gap of 350 tons to 360 tons, Albert Cheng, Far East managing director at the council, said yesterday. “With increasing demand in China we will have to rely on imports to fill the gap between demand and supply.” China is the world’s largest gold producer.
Demand for gold jewelry gained 21 percent in the first quarter from a year ago to 142.9 tons, the highest level ever, and China became the largest investment market, the council said. Bullion jumped to a record $1,577.57 an ounce this month as investors sought a store of value amid rising inflation and concerns about the strength of the global recovery.
Read more: Gold Imports by China May Rise After Demand Gains to Record, Council Says
Most China stocks fell, led by utilities and industrial companies, on concern government controls on electricity prices amid power shortages will hurt economic growth.
Huaneng Power International Inc. fell to the lowest level in three weeks after the China Securities Journal said a nationwide price increase is "unlikely." A gauge tracking industrial companies in the CSI 300 Index slid to a four-month low on concern power shortages will hurt production. Industrial & Commercial Bank of China Ltd. and China Vanke Co., the nation's largest developer, advanced on speculation their share prices were undervalued relative to their earnings prospects.
"Power shortages are a major problem that may drag China's economic growth for the short term, as it will restrict manufacturers' production and increase their operating costs if prices rise in some areas," said Mei Luwu, a Shenzhen-based fund manager of Lion Fund Management Co., which oversees more than $7.8 billion. "Some low-valuation stocks like banks and developers offer buying opportunities for long-term investors who are building up allocations."
Read more: Most China Stocks Fall Amid Power Shortage, Growth Concern
Chinese economic data suggests that the risk of a "hard landing" in the world's second-largest economy is rising, JPMorgan Chase & Co.'s Adrian Mowat said.
Fixed-asset investment in real estate has increased 35 percent in the first four months of the year even amid "very weak" property sales demand, Mowat, the brokerage's chief Asia and emerging-markets strategist, said in a Bloomberg Television interview in Hong Kong. This means that residential inventories will increase and lead to a contraction in construction activity this year, he said in the interview.
"I'm quite worried about the Chinese data, which suggests to me the probability of hard landing is building in China," Mowat said. Global markets, including commodities, will continue to be "correcting," he said.
Read more: China's Risk of 'Hard Landing' Is Increasing, JPMorgan Says
China plans to limit foreign investors' investment proportion in new projects for key components of new-energy vehicles to under 50 percent, the National Business Daily (NBD) reported.
This is the first time that China's authorities clearly defined the investment proportion of joint ventures producing key components for new-energy cars, NBD said.
TELSTRA may increase its efforts to penetrate the world's most populous nation after naming Xiaowei Chen to lead its operations in China. Ms Chen, a former chief executive of Orange Sky Entertainment Group, will be based in Beijing and report to Telstra International managing director Tarek Robbiati.
"Xiaowei's in-depth knowledge of China's new media space and ability to adapt and deliver in the fast-moving online sector provides the experience required for Telstra's continued growth in China," Mr Robbiati said.
Read more: Telstra puts key new media talent on the ground in Beijing
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