China's securities regulator has resumed approving sales of
mutual funds after a two-month suspension as part of its efforts to
cushion the stock market from declining further after recent
corrections.
ICBC Credit Suisse Asset Management Co Ltd said yesterday that
its Core Value Funds has gained regulatory permission to reopen for
subscriptions on Friday, the first mutual-fund sales since
September 21.
Golden Eagle Asset Management Co Ltd also said it will resume
the sales of its Component Stocks Preferred Funds in late
November.
The China Securities Regulatory Commission has virtually
suspended screening the issue of new mutual funds since September
as it wanted to control excess liquidity in the stock market and
tighten operations of funds to ensure stability.
Equity-invested mutual funds now account for more than 80
percent of the total fund products. The bold investment strategies
of the fund managers in a previous bullish stock market heightened
the regulator's worries over a potential crisis if sentiment turned
sour, said industry insiders.
By the end of last month, the aggregate equity of China's mutual
funds climbed up to 3.312 trillion yuan (US$441.6 billion). The
amount almost quadrupled the figure at the beginning of this
year.
The combined scale of China's 341 funds run by 59 firms has
grown to 2.055 trillion shares by the end of October, nearly 2.8
times as much as that at the beginning of this year.
Earlier this month, the CSRC urged fund companies to avoid
expanding blindly and banned them from misleading clients or
engaging in speculative investment.
In October, the CSRC ordered that mutual funds must be assessed
for their level of risks before they are offered to investors for
sale.
"However, the recent tumbles on the stock market have boosted
the need to resume the sales of new fund products and give the
market a lift," said Dai Ming, an analyst with the Kingsun
Investment Management Co.
The Shanghai Composite Index, which tracks yuan-denominated A
shares and hard-currency B shares, closed at 5,158.12 yesterday,
versus the record on October 16 of 6,124.04.
(Shanghai Daily November 14, 2007)
