(Yicai) April 2 -- GIC Private, Singapore’s sovereign wealth fund, has reduced its holdings in Zijin Mining Group, divesting about HKD1 billion (USD128 million) worth of shares, amid a sustained rapid rise in gold and copper prices which has boosted the Chinese gold miner's stock price. By locking in its profits early, GIC, as a long-term investor, will likely reposition its assets, industry insiders said.

GIC pared its stake in Zijin Mining by over 60 million shares in the first three months, according to data recently released by the Hong Kong bourse. Most recently, on March 27, the sovereign wealth fund sold 5.4 million shares, with a value of almost HKD100 million (USD12.8 million). GIC's shareholding has now been diluted to 5.99 percent from 7.02 percent on Jan. 7.

The Longyan-based miner’s stock price has gained over 20 percent in value since the start of the year, largely thanks to record-high output and profits from copper and gold mining last year. Net profit surged 51.8 percent from a year earlier to CNY32.1 billion (USD4.4 billion) while revenue climbed 3.5 percent to CNY303.6 billion (USD41.7 billion).

Gold prices had broken past USD3,000 per ounce, as of March 31, while copper prices topped CNY80,000 (USD11,001) per ton. Li Qian, an investment consultant at Huiyan Zhitou Technology, told Yicai that the gold market is cyclical. With gold prices hitting new highs, the market is on an upward swing. But, historically, when gold prices peak, market volatility tends to increase.

While rising precious metal prices usually benefit mining companies, they can also lead to the overvaluation of such stocks, said Yu Fenghui, an advisor at the Top 100 Hong Kong Listed Companies Research Centre. GIC has chosen to take profits early to lock in gains and avoid potential price corrections. Furthermore, given changes in the global macroeconomic environment, GIC may adjust its asset allocation strategy and shift towards more promising or more stable asset classes.

Zijin Mining [SHA: 601899] saw its A-shares close down 2.4 percent at CNY17.50 (USD2.40) per share today. The Hong Kong-traded stock [HKG: 2899] closed down 2 percent at HKD17.32 (USD2.23)

Editor: Kim Taylor