China's Gold Miners Gain as Investors Seek Haven Amid Trade War

(Bloomberg) -- China’s gold stocks are the latest haven for spooked investors sheltering from the trade war fallout.

Gold miners are among the top gainers on the MSCI China Index in the past five days. Zhaojin Mining Industry Co. in Hong Kong and Shandong Gold Mining Co. in Shanghai have surged at least 9%.

Others in the business also gained. Gansu Ronghua Industry Group Co., Yintai Resources Co. and Chifeng Jilong Gold Mining Co. have all advanced by at least 13% since late May. Zhongrun Resources Investment Corp., which produces minerals, rose by the 10% daily limit on Tuesday before paring gains to 7% at the close.

"The prospects of China and the U.S. moving back to the negotiating table have grown dim in the near term, after China published its white paper," said Alvin Cheung, an associate director at Prudential Brokerage Ltd. in Hong Kong, referring to a state council document addressing Beijing’s position on the trade dispute and blaming the U.S. for the breakdown in talks.

"Investors, some of whom are subject to a limit on cash holdings, are fleeing to the safest assets," Cheung said. "Equity investors are also choosing these stocks, which will benefit from the gold rally."

Companies in the gold business have benefited as escalating U.S.-China trade tensions hurt the outlook for economic growth, damping investors’ risk appetite and triggering a flight from equity markets for safer investments.

Gold eked out its biggest gain in more than four months on Monday. Spot gold has advanced 3.8% in the past five days. It rose 0.3% to $1,328.3/oz at 4:34 p.m. in Shanghai.

--With assistance from Philip Glamann.

To contact Bloomberg News staff for this story: April Ma in Beijing at ama112@bloomberg.net

To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, Magdalene Fung, David Watkins

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With assistance from Bloomberg