<Research>BOCI: Sector Drop Overdone Following CN's New VAT Regulation on Gold; CHOW TAI FOOK and LUK FOOK HOLD Remain Favorable
Impact of New VAT Regulations: The announcement of new VAT regulations on gold by the Chinese government led to a significant decline in the stock prices of gold jewelry retailers, as reported by BOCI.
Market Analysis: BOCI anticipates a mild negative impact on industry profits, predicting a mid-single-digit decline in EPS, but believes the current stock price correction is excessive due to other factors like falling gold prices and profit-taking.
Optimism for Key Retailers: Despite the market downturn, BOCI remains optimistic about CHOW TAI FOOK and LUK FOOK HOLD, rating both as Buy with target prices of $17.8 and $23.8, respectively.
Investor Sentiment: The upcoming interim results for both companies are expected to alleviate investor concerns amidst the current market volatility.
Get Free Real-Time Notifications for Any Stock
Analyst Views on 00590
About the author
Jewelry and Gold Mining Stocks Soar as Gold and Silver Prices Reach Record Highs; LAOPU GOLD Jumps 14% to Six-Month Peak
Gold and Silver Prices Surge: Gold futures in New York reached a historic high of USD5,080.1 per ounce, while silver futures peaked at USD107.925, reflecting significant increases in precious metal prices.
Jewelry Stocks Performance: Hong Kong-listed jewelry stocks, particularly LAOPU GOLD, experienced substantial gains, with expectations of strong sales during the Spring Festival due to high gold prices and promotional activities.
Gold Miners Thrive: Gold mining companies like ZIJIN MINING and ZHAOJIN MINING saw their stock prices rise significantly, benefiting from the increasing gold prices and high trading volumes.
Short Selling Activity: Various stocks in the jewelry and mining sectors showed notable short selling ratios, indicating a mix of investor sentiment and market speculation amidst the rising prices of gold and silver.
Jewelry and Gold Stocks Perform Well; LAOPU GOLD Rises Approximately 7%; LUK FOOK HOLD Reaches 7.5-Year High; CHOW TAI FOOK Remains Weak
Gold and Silver Prices Surge: Gold prices are nearing US$5,000 per ounce, with spot gold last quoted at US$4,944.08, while spot silver reached US$98.64 per ounce, reflecting significant increases in both metals.
Impact on Jewelry Stocks: The rise in gold prices has led to increased market expectations for gold product prices, positively affecting jewelry stocks in Hong Kong, particularly LAOPU GOLD, which saw a notable increase in its share price.
