Amid the volatility of global financial markets, a notable wave of asset movements is taking place in China: individual investors are massively dumping gold to invest in the domestic stock market. This shift reflects not only expectations of economic recovery but also a change in investors’ risk appetite.
Individual Investors Sell Gold, Turn to Stocks
According to data from Bloomberg, in just the past month, China's four largest gold ETFs have seen net outflows of 3.2 billion yuan (nearly $450 million).This is not a small number, reflecting a strong profit-taking trend from safe-haven assets such as gold to restructure the portfolio to instruments with higher profitability.
Mr. Steve Zhou, analyst at Huaan Fund Management, commented:
“Chinese retail investors are taking profits in gold to seek higher returns from domestic stocks.”
Chinese Stocks Are Becoming the New Destination
The recent recovery of the Chinese stock market is a key factor in driving money back into the capital market. The CSI 300 Index – which represents the 300 largest capitalization stocks in Shanghai and Shenzhen – has gained nearly 5.5% in just one month.
As the world’s second-largest economy gradually overcomes the post-COVID difficulties and real estate crisis, the effectiveness of stimulus policies has rekindled investor confidence. From here, capital flows tend to leave defensive assets such as gold and switch to channels that offer higher yields.
PBOC Quietly Increases Gold Reserves
While retail investors are turning their backs on gold, the People’s Bank of China (PBOC) is quietly moving in the opposite direction. According to Money Metals analyst Jan Nieuwenhuijs, the PBOC’s actual gold holdings could reach 5,065 tonnes by the end of 2024, much higher than the official figure of 2,296 tonnes.
Mr. Joseph Cavatoni from the World Gold Council also questioned:
“There is debate about whether the PBOC’s gold purchase figures fully reflect actual activity.”
This shows that while individuals are taking risks to seek profits, large institutions are quietly increasing their safe assets – creating a remarkable polarization in the market.
Conclude
The wave of money flowing out of gold and into stocks in China is a clear manifestation of the shift in investment appetite amid the economic recovery. However, large institutions such as the PBOC still play a long-term balancing role by quietly accumulating gold.
