The political unrest in Hong Kong is hindering the trade of gold with China, the biggest bullion buyer in the world.
China’s restrictions on gold imports from Hong Kong caused the trade to fall to its 8 year low of 8.085 tonnes. China’s import restrictions are for controlling the flow of capital from moving out of the country as reported by CNBC. The protests are driving away tourists and causing jewellery sales to drop amidst concerns regarding the logistics of shipping gold out of Hong Kong.
Hong Kong is now running the risk of losing out on yet another liquid asset which usually helps it from safeguarding itself against economic uncertainties.
Joshua Rotbart of J. Robart & Co, a Hong Kong-based bullion house said, “On the individual investor level, we see more clients opting to store their gold in what they consider as safer jurisdictions.”
“We know at least hundreds of millions worth of gold has left Hong Kong, mostly to Singapore, but some to Switzerland,” Rotbart added.
The protests at the international airport of Hong Kong caused flights to get cancelled which has again affected the gold market as most of it is shipped by commercial aeroplanes, as reported by Rotbart.
Hong Kong historically has been the go-to-market for physical gold. The share of all the gold that China buys has dipped below 40% for Hong Kong from approximately 70% back in 2014, according to the data provided by consultants GFMS Refinitiv and official Hong Kong data.
GFMS Refinitiv also reported that China’s imports for bullion declined by 45% in the first 6 months of this year to 175.7 tonnes. It was 321.1 tonnes last year.
“Further disruptions, either from the protesters side or the government’s side will encourage us revisit our recommendations to clients, and consider moving assets away from the city,” Rotbart added.