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MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  Agricultural Bank of China Limited    1288   CNE100000Q43

AGRICULTURAL BANK OF CHINA LIMITED

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China banks, regulators move to cool gold rush

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07/29/2020 | 03:22am EDT

Chinese regulators and major banks are rushing to curb precious metal trading by domestic investors to temper speculation that some fear could cause a repeat of this year's oil trading mishaps.

The scramble to limit risks comes as gold prices hit record highs this week, spurred by investors hunting for safe haven assets in markets rattled by worries of rising coronavirus cases, lofty equity valuations and a falling U.S. dollar.

A deepening rift between the United States and China has also become a factor drawing mainland investors to gold.

Industrial and Commercial Bank of China (ICBC), the country's biggest lender, said on Wednesday it would bar its clients from opening new trading positions for platinum, palladium and index products linked to precious metal from Friday. That directive, according to the lender's customer service department, was in response to "violent price volatility" and "the need to control risks."

Agricultural Bank of China said it had recently suspended new businesses related to gold, while Bank of China said it halted new account openings for platinum and palladium trading.

The Shanghai Gold Exchange said on Tuesday gold and silver holdings were high, and it would take risk-control measures if warranted to protect investors.

The Shanghai Futures Exchange, where gold and silver futures contracts are traded, also urged its members to strengthen risk-management efforts and invest rationally.

"Gold remains a niche investment in China due to limited investment channels," said Frank Hao, an analyst at Hywin Wealth Management in Shanghai. "Investors mainly rely on purchasing paper gold products at commercial banks as a way to counteract risks."

Chinese investors are also actively trading gold ETFs, whose turnover has jumped in recent weeks.

Huaan Gold ETF, Asia's biggest gold exchange-traded fund, has seen its assets under management soar more than 68% to over 11.8 billion yuan ($1.69 billion) since end-2019.

Regulators are mindful of risks after investors were caught off-guard in late April when Bank of China settled a crude oil futures trading product known as Yuan You Bao at minus $37.63 per barrel, following a historic slide in oil prices into negative territory.

The bank subsequently agreed to settle with more than half its customers facing losses, potentially taking a 6 billion to 7 billion yuan hit.

Hao said any further gains in gold may spur more speculation, despite regulatory attempts to tamp it down.

"If the gold price rises past $2,000, some more hot money will certainly flow into the market, and some investors will divert their stock investments to gold," he said.

($1 = 7.0010 Chinese yuan)

(Reporting by Andrew Galbraith, Winni Zhou and Samuel Shen in Shanghai and Arpan Varghese in Bangalore; Editing by Vidya Ranganathan and Jacqueline Wong)

Stocks mentioned in the article
ChangeLast1st jan.
AGRICULTURAL BANK OF CHINA LIMITED 0.83% 2.42 End-of-day quote.-29.45%
BANK OF CHINA LIMITED 0.42% 2.4 End-of-day quote.-27.93%
GOLD 0.77% 1903.49 Delayed Quote.25.01%
LONDON BRENT OIL -3.99% 40.38 Delayed Quote.-38.18%
PALLADIUM 0.84% 2338.518 Delayed Quote.19.80%
SILVER 1.70% 23.75 Delayed Quote.36.05%
THE PLATINUM GROUP PUBLIC COMPANY LIMITED 0.00% 2.26 End-of-day quote.-44.61%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) -0.45% 6.7502 Delayed Quote.-2.57%
WTI -4.73% 38.061 Delayed Quote.-34.77%
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Financials
Sales 2020 662 B 97 473 M 97 473 M
Net income 2020 194 B 28 638 M 28 638 M
Net Debt 2020 - - -
P/E ratio 2020 3,79x
Yield 2020 7,75%
Capitalization 1 077 B 159 B 159 B
Capi. / Sales 2020 1,63x
Capi. / Sales 2021 1,53x
Nbr of Employees 455 095
Free-Float 60,9%
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Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 3,29 CNY
Last Close Price 2,12 CNY
Spread / Highest target 110%
Spread / Average Target 55,2%
Spread / Lowest Target 7,54%
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NameTitle
Qing Song Zhang Vice Chairman & President
Mu Bing Zhou Chairman
Jing Dong Wang Chairman-Supervisory Board
Xing Xiao Independent Non-Executive Director
Ke Qiu Zhang Executive Director & Head-Investor Relations
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