Awareness and engagement levels have definitely risen and it is worth noting that China’s sovereign mint, China Gold Coin, offered a commemorative platinum coin in 2019; the first platinum coin minted in 14 years, the previous one being the prestigious one ounce platinum Panda.
What factors are at play that give you confidence that future growth is achievable?
The investment case for platinum is the same in China as elsewhere – a rare precious metal, offering portfolio diversification and a long-term store of value, and an industrial metal with constrained supply and demand growth potential. Platinum is currently at historic discounts to its sister metal palladium and to gold, offering upside potential should platinum revert to a position where its price reflects supply/demand fundamentals, its industrial value-in-use or its traditional premium to gold.
In particular, platinum’s demand growth potential in autocatalysis has been strengthened by tightening emissions control legislation – an issue that is well understood in China which has been working hard to reduce pollution levels. Similarly, China is also making energy decarbonisation a priority and is one of the most proactive economies in terms of developing its hydrogen and fuel cell electric vehicle industry.
The nascent hydrogen economy is an important source of potential future platinum demand and investors in China have a growing understanding of this and – crucially – there is growing evidence here that hydrogen technologies, using platinum catalysts, are poised to move to scale, which is helpful in reinforcing the investment case for platinum.
Retail platinum investment markets in the US, Japan and Europe have seen strong demand in response to the COVID-19 pandemic. Is it the same in China?
Make no mistake, the impact of COVID-19 has been profound. On one hand, it hit the platinum price hard back in March, although this created an incredible opportunity to purchase for investors. Here, as in other markets, there was very strong retail demand for platinum in the first quarter, mainly at banks.
What else will support the growth of platinum investment in China in future?
Clearly, the global economy is going to face economic headwinds for some time to come, which creates uncertainty and increases risk. Precious metals, including platinum, are alternative assets that can protect against risk and they will be in demand. This will be supported by the increased awareness in China of platinum as an investment asset – this is an aspect we are passionate about and have been successful in growing.
We have built strong relationships with major organisations and are working hard to ensure that the growth in product availability matches increasing investor demand. Investment demand growth is supported and reinforced here by the awareness and strong drive to reduce harmful emissions from vehicles and embrace the hydrogen economy as a route to decarbonisation. The importance of platinum to these efforts and the potential for consequent growth in platinum demand is increasingly recognised by investors in China.