The stock market fell 2.7 percent yesterday, as mutual funds
continued to reduce the weighting of stocks in their portfolios to
meet the expected increase in redemption by the end of the
year.
The benchmark Shanghai Composite Index dropped 137.5 points to
close at 4958.04, with 747 of 909 stocks closing lower. The
Shenzhen Component Index plunged 4.73 percent to close at
16035.19.
Analysts said that cooling of the stock market had depressed the
performance of most mutual funds, prompting many fund managers to
drastically cut down their holdings of stocks.
All fund classifications showed decreased profits in
November.
Equity funds led the slump with an average 15.05 percent loss.
Mixed-asset aggressive funds fell 13.23 percent, while mixed-asset
flexible funds dropped 12.71 percent, according to Lipper, which
tracks the performance of mutual funds.
The QFII A-share funds posted an average loss of 13.93 percent
while redemptions by investors had increased noticeably, according
to Lipper.
"Controlling the position became a rational choice for fund
managers," Zhou Liang, head of research at Lipper China, said,
adding that increasing cash holdings to avoid risk was a "safe
choice" in the face of fluctuations.
A lot of funds were also diverted from the stock market
yesterday to the subscription of three new initial public offerings
to be issued today, analysts said.
China's leading large-sized wind generator sets producer
Goldwind Science and Technology Co Ltd, China Pacific Insurance Co
and Liaoning Publishing will begin online subscriptions today.
(China Daily December 14, 2007)
