HONG KONG: Hong Kong is set to launch its first exchange-traded fund, which will track the price of gold.

The World Gold Council, which is sponsoring the fund, said the facility will allow Hong Kong investors to trade the yellow metal without actually buying physical gold.

Inflation in Hong Kong has been steadily rising in recent months, hitting 6.1 per cent in June, and investors are keen to cash in on gold to preserve their wealth and hedge against rising prices.

Hong Kong's market regulator, the Securities and Futures Commission, has given the green light for the launch of the SPDR Gold Trust by the World Gold Council and investment firm, State Street Global Advisors.

The exchange-traded fund will be listed on the Hong Kong Stock Exchange. It will track the price of gold and is backed by actual bullion which is kept in a HSBC vault in London.

Sammy Yip, Head of Exchange-Traded Funds (Asia Pacific), State Street Global Advisors, said: "You may trade these gold shares in exactly the same way you trade any stock. There's not much requirement for you. As long as you have a brokerage account, you are able to trade this gold ETF very efficiently."

Investors must make a minimum order of ten shares, with one share based on the price of one-tenth of an ounce of gold.

Hong Kong's listing follows the footsteps of a similar fund launched in Singapore and Tokyo, but the fund's manager said there will be no rivalry between the three markets.

"We are talking about three different markets and the underlying investors' characteristics are also different. So I believe the listings basically will be able to offer more to investors to participate in this product," said Yip.

In these times of economic uncertainty, the World Gold Council said gold should appeal to long-term investors here as it is typically less volatile than other commodities.

The gold exchange-traded fund will be listed on Hong Kong's stock exchange on July 31.


- CNA/so