Gold Demand Could Double in China, Mining Companies Soar

In Asia Monday China's Shanghai Composite Index climbed 2.1% to 3,124 and in Hong Kong the Hang Seng Index gained 0.9% to close at 21,237. In Japan the Nikkei 225 Index remained virtually unchanged, dipping 0.1%, to end the day at 10,986.

Mining companies surged today after the World Gold Council said that the market for gold in China could double over the next decade, having increased 13% each year for the past five years.

The country's economy is growing at a record pace, and as personal wealth increases, so does the desire for the glittery trappings of an affluent lifestyle. We've already seen car ownership, once considered an incredible luxury, enter the mainstream, and anyone who's seen moneyed Mainland shoppers snap up expensive items -- from Louis Vuitton handbags to Bulgari watches and Tiffany earrings -- in Hong Kong won't be surprise to hear the prediction that demand for gold is on the upswing.

Today Hong Kong-listed Real Gold Mining soared 3.7%, and in Shanghai, Henan Yuguang Gold & Lead climbed 2.8% and Zijin Mining gained 2.5%. Other mining companies also rose today in China with Datong Coal Industry skyrocketing 6.1%, Yanzhou Coal Mining surging 5.6%, Jiangxi Copper leaping 3.4% and China Coal Energy rising 3%.

Banking shares also posted gains. In China, China Citic Bank climbed 3.6%, China Merchants Bank rose 3.6% and Shanghai Pudong Development Bank rallied 3.2%. China Construction Bank added 2.3% and Industrial & Commercial Bank of China advanced 2.2%.

Building company Metallurgical Corporation of China, racked up a 14% gain today. The company is best remembered for its work on the Bird's Nest stadium built for the Beijing Olympics. According to Bloomberg, the company has invested in a new project in Zhuhai, a Pearl River Delta city near Macau known in the region as a destination for shoppers in search of Chinese antiques. It's a Special Economic Zone with many foreign companies and palm tree-lined boulevards. Companies with business there include Matsushita, ExxonMobil and BP.

Hong Kong property companies fared well today. China Resources Land made the biggest gain, adding 4.8%. Other big gainers included China Overseas, which advanced 1.8%, Cheung Kong, which moved up 1.4% and Hang Lung, which added 1.1%.

In Japan, drugmaker Takeda Pharmaceutical plunged 2.8% and video and arcade game company Konami tumbled 4.7%. Meanwhile Epilda Memory, which makes computer memory chips, surged 3.8% and Kyosha, maker of circuit boards, gained 3.4%.

Japanese retailers rose with Seven & I, owner of 7-Eleven shops rising 2.9%, J. Front Retailing climbing 3.3% and UNY adding 0.7%. Takashimaya, the upscale department store chain, advanced 1.4%.

Among car companies, Toyota fell 0.5%, Mazda slid 0.4% and Isuzu gained 1.6%. Gulliver International, which operates a chain of used car stores, suffered a 10.7% fall. In a struggling economy, you'd think second-hand cars would be big sellers, but owning the latest model is a national habit that will be hard to kick.