Chow Tai Fook Jewellery Group reported a muted performance for the first half of the fiscal year, with profits landing just below expectations as the industry braces for the impact of China’s recent policy change on gold taxation. The retailer posted HK$2.5 billion in net income, marginally short of analyst forecasts of HK$2.6 billion, according to its latest filing.

While gross margin eased to 30.5%, the company noted that stronger sales of higher-margin fixed-price jewellery and the appreciation of gold helped offset the pressure. In mainland China, average selling prices for fixed-price gold pieces continued to rise, supported by Chow Tai Fook’s ongoing premiumisation strategy amid fierce competition from domestic rivals such as Laopu Gold.

The jewellery giant has been navigating a tough landscape shaped by volatile gold prices, softer consumer sentiment, and a fast-evolving competitive environment. Despite these challenges, the company said it remains optimistic about sustaining momentum through the second half of FY2026.

However, uncertainty looms after China eliminated a long-standing tax rebate on gold imports on Nov. 1, a move aimed at shoring up government revenues. The change is expected to raise gold acquisition costs and could squeeze retailer margins further if passed on to consumers.

Chow Tai Fook has already revised certain product prices to reflect rising gold rates. Even so, its stock has rallied strongly, climbing 127% year to date, signalling investor confidence despite near-term industry turbulence.