The share prices of these counters have indeed risen but not by the same margin as that seen in the price of the precious metal.
For instance, the share price of jewellery maker Tomei Consolidated Bhd, which has a chain of 57 outlets across Malaysia, has risen from RM1.10 on Oct 6, the day before the Hamas attack on Israel that triggered the conflict, to RM1.19 at the close yesterday.
That accounts for a 8.1% increase, short of the 8.36% rise in the price of gold in the same period. The precious metal was priced at US$1,986.49 an ounce yesterday, up from US$1,833.20 on Oct 6.
Tomei subsidiary YX Precious Metals Bhd, which is a jewellery wholesaler, saw its share price rise from 26 sen on Oct 6 to 28 sen at yesterday’s close for a 7.6% rise.
But rival Poh Kong Holdings Bhd failed to ride on the increase in the price of gold. Its share price closed at 84 sen yesterday, up just 2.5 sen from 81.5 sen on Oct 6 for a 3.1% increase.
The impact, as Rakuten Trade vice-president of equity research Thong Pak Leng puts it, is “unlikely to be significant”.
Thong pointed out to FMT Business that unlike other investments, gold does not offer any dividend or income. “This accounts for the limited impact,” he added.
Apart from that, he said, there will also be minimal impact on institutional funds.
“Institutional funds, which make up a significant portion of the investment landscape, tend to allocate the bulk of their resources in equities and other income-generating assets,” he said.
“Gold, being non-income producing, usually constitutes a smaller portion of their portfolios,” he added.
Institutional funds gather substantial financial resources from major investors to form a diverse investment portfolio comprising assets like stocks, bonds, real estate and other securities.
Thong said that retail investors, whose investments make up only about 20% of the equity market, have a relatively small footprint in the larger investment landscape.
“Therefore, their impact on the overall performance of gold-related counters on the local stock exchange is considered minimal,” he added.
The price of gold last breached the US$2,000 mark on May 3, 2023 when it closed at US$2,052.04 per ounce, driven mostly by the global banking crisis which saw more investors moving towards safe havens.
It did give counters related to the precious metal a small boost. On that day, the share price of Tomei Consolidated closed at RM1.32 and that of YX Precious Metals closed at 32 sen. On the same day, the share price of Poh Kong closed at 92 sen.
Meanwhile, spot gold was down 0.1% to RM9,238.44 an ounce, as of 5:51pm from RM9,233.44 at Monday’s close.
Spot gold represents the current market value of physical gold, usually in the form of bars or coins, available for immediate delivery and settlement.