The pullback in gold stocks has significantly outpaced the decline in international gold prices.
As of the close on May 29, the latest A-share price of Shandong Gold Mining Co., Ltd. was 28.87 yuan, representing a drawdown of 55.96% from its year-to-date high in late January. Over the same period, Hunan Silver Co.,Ltd. experienced a drawdown of 55.92%.
In fact, since international gold and silver prices peaked and began a phased decline in late January, the previously hot precious metals market has noticeably cooled, leading to a systematic correction in related stocks.
Taking the 11 constituent stocks of the Shenwan precious metals sector as an example, the average drawdown during this period has reached 46%, with the maximum decline exceeding 47%. Several companies have seen their market capitalization roughly halved from their previous highs.
The reasons are twofold: firstly, the decline in gold and silver prices has dampened corporate profit expectations; secondly, the sector has been impacted by the rotation of market focus towards new hot spots like semiconductors and electronics in the first half of the year.
Against this backdrop, several listed companies' planned share reduction plans have ultimately failed to materialize. This week, cases emerged where Hengbang Shares did not reduce any holdings within the specified period, and Caibai Shares announced an early termination of its reduction plan.
Rare Synchronization of Gold Prices and Stock Prices
Typically, in the upstream raw materials and cyclical stock sectors, stock prices lead commodity prices, a pattern observed multiple times in A-share history.
The decline in gold prices and gold stocks in the first half of the year was notably different, as both peaked simultaneously in late January, making this round of decline more abrupt.
On January 29, London spot gold hit a historic high of $5,598.75 per ounce. On the same day, the aforementioned Wind Precious Metals Index, Shandong Gold Mining Co., Ltd., and Hunan Silver Co.,Ltd. also reached new all-time highs, marking the beginning of a four-month unilateral decline for both.
By the afternoon of May 29, London spot gold had fallen to around $4,510 per ounce, a roughly 20% drawdown from the late January high.
The end of the international gold price uptrend has also altered the previous performance-driven logic for related listed companies, where rising gold prices boosted profit margins.
For instance, Zijin Mining, China's largest gold producer, achieved a gold concentrate sales price of 1,010.55 yuan per gram in Q1 2026. While the sales price increased year-on-year, the unit sales cost remained relatively stable, driving the company's gold concentrate gross margin from 71.1% to 80.9%.
Entering the second quarter, influenced by the decline in gold prices, the earnings growth trend for upstream gold enterprises faces a potential end.
Taking the Shanghai Gold Exchange's gold spot price (Au9999) as an example, it serves as a key pricing reference for many domestic gold companies.
Statistics show that in Q2 (as of May 28), the average price for this gold spot was 1,025.27 yuan per gram, lower than Q1's 1,088.64 yuan per gram but higher than the 770.46 yuan per gram in Q2 2025.
Reflecting on corporate performance, companies like Zijin Mining and Shandong Gold Mining Co., Ltd. may still maintain year-on-year profit growth in Q2 2026, but the previous trend of sequential quarterly profit growth is likely to end.
Wind data also indicates that since April this year, a few sell-side institutions have already lowered their 2026 profit forecasts and target prices for gold-related listed companies.
Beyond the changes in corporate profit expectations caused by the gold price decline, the shift in secondary market focus cannot be ignored.
Amid a market environment chasing hot sectors like optical modules, semiconductors, and power, precious metals stocks, which had generally doubled in value since 2025 and remained at high levels, no longer possess a comparative advantage.
Wind statistics show that from February to May 28 this year, the Shenwan primary sector indices for Electronics and Utilities (driven by power companies) rose by 32.08% and 19.97%, respectively.
Among Shenwan secondary sectors, the Electronic Components sector rose 62.98% during the same period, leading the A-share market, while the Precious Metals sector fell 35.88%, ranking last in the entire market.
Changes in some trading data also indicate a clear decline in the "popularity" of the precious metals sector in the first half of the year.
During the gold price surge in January, the average daily turnover rate for the Shenwan precious metals sector reached 8.04%. It declined for three consecutive months thereafter, dropping to 3.72% and 3.85% in April and May (as of May 28), respectively.
Precisely due to the aforementioned changes in fundamentals and secondary market focus, recent precious metals stocks like Shandong Gold Mining Co., Ltd. and Hunan Silver Co.,Ltd. have experienced extreme drawdowns of around 50%.
Share Reduction Plans Encounter Setbacks
The systematic correction in the precious metals sector has directly disrupted the original share reduction plans of related companies. Recent cases in the A-share market include under-fulfilled reductions, "zero shares reduced," or early announcements to terminate reduction plans.
On January 20, on the eve of the international gold price peak, Western Gold announced a reduction plan, with its controlling shareholder, Xinjiang Nonferrous Metals Industry (Group) Co., Ltd., planning to reduce 9.1099 million shares.
By the expiration of the reduction period, Xinjiang Nonferrous Metals Industry (Group) Co., Ltd. had actually reduced 3.8244 million shares, leaving 5.2856 million shares unreduced.
Ultimately, the company's actual transaction price was 35.00~35.92 yuan per share, which was a very favorable reduction price in the first half of the year, nearly sold at the highest point since mid-March. As of now, Western Gold's latest price is only 27.44 yuan.
Other listed company shareholders who acted slightly slower found it difficult to find good selling opportunities.
When Hengbang Shares released its shareholder reduction pre-disclosure announcement on January 28, its stock price was 21.42 yuan. By the expiration of the reduction period on May 27, Hengbang Shares' price had fallen to 13.76 yuan.
Ultimately, its shareholder, Yantai Hengbang Group and its concerted actors, did not reduce a single share.
For Caibai Shares, located downstream in the gold industry chain and directly facing the end consumer market, its shareholder Mingpai Industrial, holding over 5%, recently announced an early termination of its reduction plan, citing "changes in its own funding needs and judgment of the company's value."
It is worth noting that although the drawdowns for the aforementioned precious metals stocks are substantial, overall shareholding positions remain relatively stable.
Taking the Shenwan precious metals sector as an example, as of the end of Q1 2026, fund holdings totaled 1.583 billion shares, higher than the comparable figures for Q1 2025 and Q3 2025 (Wind fund holding data: semi-annual and annual reports count all fund holdings for the stock; quarterly reports are incomplete statistics).
More frequent margin trading data also shows that recent margin balances remain relatively high and have not followed the stock price to new phased lows.
Taking the previously mentioned, most sharply declining Shandong Gold Mining Co., Ltd. as an example. Related data shows the margin balance peaked at 3.045 billion yuan in late January, then dropped to 2.459 billion yuan in late March. Since then, the margin balance has increased instead of decreasing, rebounding to around 2.9 billion yuan by mid-May.
Other top decliners like Hunan Silver Co.,Ltd., Zhongjin Gold, and Western Gold show similar trends in their margin balances.
Furthermore, during the international gold price correction from April to May this year, industrial capital also took action. According to incomplete statistics, since April, several listed companies (including Hong Kong-listed ones) such as Shandong Gold Mining Co., Ltd., Zijin Mining, Shanjin International, as well as Laopu Gold and Wanguo Gold, have conducted share increases or repurchases.
Moving forward, it remains to be seen whether more listed companies will follow suit to support their share prices, and whether precious metals prices and related stocks can stabilize and cease their decline.
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