March 7 (Bloomberg) -- Lion Fund Management Co., the first in China to invest in overseas gold-backed exchange-traded products, has been approved to as much as double the size of its fund raising, said a company executive today.
The State Administration of Foreign Exchange approved another $500 million quota for overseas securities investment, and the fund will use part of that to increase the size of the gold fund, said Yang Zi, the company’s media affairs manager said by phone from Beijing.
Lion raised more than 3.2 billion yuan ($483 million) for the fund, using up the entire $500 million initial quota granted by the SAFE, according to a company statement on Jan. 11. Before the launch of the fund, China, the world’s largest gold producer, didn’t have a gold-backed ETF. Investors normally buy physical gold, or invest through gold contracts traded on the Shanghai Gold Exchange, the Shanghai Futures Exchange or through banks.
“We haven’t decided whether to use all or part of the new quota in this particular fund,” Yang said. “The enthusiasm for subscription continues, and the previous quota obviously can’t meet demand.”
Gold investment in China, the second-largest consumer, may gain 40 percent to 50 percent this year as investors increase purchases of the precious metal as a store of value, the World Gold Council forecast on Feb. 17.
Bullion for immediate delivery reached a record $1,440.32 per ounce on March 2, and traded at $1,437.95 at 11:25 a.m. Shanghai time. It climbed 30 percent last year, marking the 10th consecutive annual gain.
To contact the Bloomberg News staffs on this story: Helen Sun in Shanghai at firstname.lastname@example.org
To contact the editor responsible for this story: James Poole at email@example.com