Core Viewpoint - Gold mining and jewelry stocks experienced significant declines following the announcement of new tax policies related to gold trading, which aim to regulate the market and reduce speculative activities [1] Company Performance - Lao Pu Gold (06181) fell by 8.04%, trading at 629.5 HKD - Chow Tai Fook (01929) decreased by 6.18%, trading at 14.28 HKD - Shandong Gold (01787) dropped by 4.53%, trading at 31.22 HKD - China Gold International (02099) declined by 5.86%, trading at 123.7 HKD - Zijin Mining (02899) decreased by 3.41%, trading at 31.14 HKD [1] Industry Analysis - The Ministry of Finance and the State Taxation Administration released new tax policies aimed at clarifying tax obligations in the gold trading sector, addressing previous ambiguities that allowed for tax avoidance [1] - The new regulations categorize gold based on "purity + function," which is intended to suppress speculative trading and reduce compliance costs for legitimate investments [1] - According to Huatai Futures, the short-term impact of the policy may lead to increased gold prices, putting pressure on physical demand; however, in the long term, the standardization of gold investment could enhance its financial attributes and institutional ownership [1] - The ongoing global financial instability is expected to sustain medium to long-term demand for gold, despite the potential increase in holding costs that may drive wealth towards tangible assets or the stock market, thereby stimulating the economy [1]

Core Viewpoint - The adjustment of gold trading tax policies in China aims to refine and standardize the tax system, impacting the cost structure for different market participants and potentially benefiting long-term investors while reducing speculative trading opportunities [1][5][7]. Tax Policy Changes - The new tax regulations, effective until December 31, 2027, differentiate between "investment gold" and "non-investment gold," with specific tax treatments for each category [2][4]. - Transactions involving standard gold through designated exchanges will be exempt from VAT upon sale, while non-investment gold will have different tax implications based on its usage [2][3]. Impact on Market Participants - The refined tax rules are expected to increase compliance costs for gold retailers and manufacturers, as they will need to adapt to the new VAT treatment and reporting requirements [6][7]. - The changes may lead to a consolidation in the gold market, favoring larger, compliant firms over smaller traders who previously exploited tax loopholes [5][6]. Investor Behavior and Market Dynamics - The increase in tax costs could lead to a tightening of market liquidity, as speculative investors may choose to liquidate positions if gold price increases do not offset the tax burden [7][8]. - Long-term investors may benefit from the new regulations, as they encourage a shift towards more stable investment vehicles like gold ETFs, reducing reliance on high-premium non-investment products [7][8].