Hong Kong jewellers keen on Qianhai site for precious metal warehouse

Gold bourse plans to invest HK$1b to develop warehouse with capacity to store 1,500 tonnes

PUBLISHED : Thursday, 20 February, 2014, 1:16am
UPDATED : Thursday, 20 February, 2014, 1:16am

The Chinese Gold & Silver Exchange Society is prepared to spend at least HK$1 billion to set up its metal warehouse in Qianhai, president Haywood Cheung Tak-hay told the South China Morning Post yesterday.

He said the funds would be in the form of bond offerings to its 171 members such as Chow Tai Fook, Chow Sang Sang and Luk Fook.

"Society members, who include all gold jewellery makers and retailers in Hong Kong, support the planned project in Qianhai. We could easily raise HK$1 billion for the construction cost for the warehouse and related facilities," Cheung said.

They have hundreds of jewellery factories in Shenzhen

The 103-year old gold bourse submitted the plan to authorities in Qianhai in December and received a positive response. A working group that includes Qianhai authorities and some exchange members has been set up to discuss the details. Cheung wanted the warehouse to have a capacity of 1,500 tonnes.

A key issue, Cheung said, is for the warehouse to be given special status by Beijing so members can freely transfer gold and silver between Hong Kong and Qianhai. China still has capital controls and only 11 mainland banks are allowed to import gold.

"Hong Kong retail jewellery [stores] such as Chow Tai Fook, Chow Sang Sang and others have a combined 4,000 shops across the mainland. They have hundreds of jewellery factories in Shenzhen. If they can conduct the trading in Hong Kong and then transfer the gold in Qianhai to their factories in Shenzhen, that would save them transport and insurance costs," Cheung said.

Qianhai, about an hour by car from Hong Kong, was named in July 2012 as a testing ground for the free flow of yuan and other policies to encourage overseas investment. "At present, many foreign gold investors dare not trade in China as there are too many restrictions. They prefer to trade in Hong Kong which is a free market. If we can have a Qianhai warehouse, it would further increase our attractiveness," said Cheung .

World Gold Council data released on Tuesday showed mainlanders bought a record 1,066 tonnes of gold last year, up 32 per cent year on year.