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The newly launched gold bourse is drawing weaker-than-expected attention from investors, with the turnover below what was anticipated by authorities as the nation slows purchases in light of the capsized ferry Sewol, data showed on Wednesday.
The gold bourse was launched on March 24 to help bring the unregulated market into the open while broadening the government’s taxation base.
The data compiled by the Korea Exchange, the gold bourse operator, shows the daily turnover averaged 3.6 kilograms, lower than the hoped-for amount of up to 10 kg. The cumulative value of gold traded came in at 3.52 billion won ($3.38 million), according to the data.
Given that some 30 kg of gold is traded daily by private dealers, the performance was lackluster.
While admitting the results were below expectations, the KRX remained upbeat on future prospects.
“The turnover is weak at the moment, but we expect a steady rise given its convenience for trading and favorable prices,” a KRX official said.
The operator said it would redouble efforts to vitalize the gold bourse and set up a fair, transparent trading system.
South Koreans hold an estimated 720 tons of gold, seven times the 104 tons kept at the central bank, and gold trading volume reaches some 100 tons on an annual basis, about 70 percent of which is believed to be traded illegally to avoid taxes.
The data showed retail investors accounted for 51 percent of total trading. The KRX said it would consider introducing additional measures to woo more dealers, wholesalers and registered members into actively participating in the trading.
Currently, nine securities firms and 56 dealers, importers and wholesalers are registered as members of the bourse, the KRX said.
Analysts said the gold bourse was less popular among investors who were chasing after risky assets such as stocks rather than safer ones like gold.
A slump in gold prices has also held them at bay, according to the analysts. In 2013, the gold prices plunged some 28 percent, ending a bullish 12-year run. The price of gold is expected to stay between $1,200 and $1,300 an ounce this year, little changed from last year’s levels, as a recovery in the U.S. economy and the strengthening U.S. dollar would limit the gains.
By Bae Hyun-jung and news reports
(tellme@heraldcorp.com)
The gold bourse was launched on March 24 to help bring the unregulated market into the open while broadening the government’s taxation base.
The data compiled by the Korea Exchange, the gold bourse operator, shows the daily turnover averaged 3.6 kilograms, lower than the hoped-for amount of up to 10 kg. The cumulative value of gold traded came in at 3.52 billion won ($3.38 million), according to the data.
Given that some 30 kg of gold is traded daily by private dealers, the performance was lackluster.
While admitting the results were below expectations, the KRX remained upbeat on future prospects.
“The turnover is weak at the moment, but we expect a steady rise given its convenience for trading and favorable prices,” a KRX official said.
The operator said it would redouble efforts to vitalize the gold bourse and set up a fair, transparent trading system.
South Koreans hold an estimated 720 tons of gold, seven times the 104 tons kept at the central bank, and gold trading volume reaches some 100 tons on an annual basis, about 70 percent of which is believed to be traded illegally to avoid taxes.
The data showed retail investors accounted for 51 percent of total trading. The KRX said it would consider introducing additional measures to woo more dealers, wholesalers and registered members into actively participating in the trading.
Currently, nine securities firms and 56 dealers, importers and wholesalers are registered as members of the bourse, the KRX said.
Analysts said the gold bourse was less popular among investors who were chasing after risky assets such as stocks rather than safer ones like gold.
A slump in gold prices has also held them at bay, according to the analysts. In 2013, the gold prices plunged some 28 percent, ending a bullish 12-year run. The price of gold is expected to stay between $1,200 and $1,300 an ounce this year, little changed from last year’s levels, as a recovery in the U.S. economy and the strengthening U.S. dollar would limit the gains.
By Bae Hyun-jung and news reports
(tellme@heraldcorp.com)
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Articles by Korea Herald
