The continuing stock market correction and tightening of money supplies may cast a cloud over new mutual fund initial public offerings (IPOs) in the short term, but fund managers are still optimistic about the future and will proceed with their expansion plans.

Boshi Fund Management Co, one of the oldest fund management companies in China, started issuing a new equity fund Tuesday.

It is the company's fourth mutual fund. Two of the so-called big Four State-owned banks, the Industrial and Commercial Bank of China (ICBC) and China Construction Bank, have agreed to lend their networks for the fund's sale.

The stock market fluctuation was a normal phenomenon. It will have some impact on the IPO, but it is not a deciding factor, said Xiao Feng, president of Boshi, at a press conference in Beijing Tuesday.

The stock market has tumbled since the start of the week, sliding further yesterday on the news of the resumption of stock IPOs in Shenzhen.

"But that does not erode our confidence in the long-term development of the bourses," said Xiao.

"Instead, I think it is a good time to invest," he said, adding that many stocks still have good investment values and the company will base its investment decisions on return ratios and corporate performance.

Compared to China's mutual fund IPO climax in the first quarter, which witnessed the selling of nearly 90 billion fund units nationwide and the birth of several 10-billion-unit giants, new funds have encountered a cooler market response since mid-April, as investors have moved away from market consolidation, shrinking the funds' net assets.

The China Securities Regulatory Commission also warned fund managers of improper competition during marketing and strengthened the sector's regulations.

But all of this did not halt the pace of fund issuance, as several more new funds entered the market. And, with a robust outlook for Chinese equities, most choose to promote equity funds.

Chinese investors are becoming more rational. Instead of speculating on the short term, more are adopting a value-oriented investment ideology, according to experts.

The quality of the stock is, therefore, the basic element deciding the success or failure of investment, said Xiao.

For the banks, the mutual fund boom is also producing a new profit source.

ICBC, for example, with the biggest retail network in China, has already sold about 23 billion mutual fund units so far this year, generating a considerable commission. Meanwhile the bank's overall fund sales was only about 10 billion last year, said Guo Chao, deputy manager of ICBC's retail banking department.

The mutual fund IPOs have been developing rapidly since last year and will continue to do so, he said.

Even the diversion of some savings from the banks by the fund IPOs did not seem to create too many problems for the banks.

According to statistics from the , outstanding renminbi deposits stood at 11.2 trillion yuan (US$1.4 trillion) at the end of April, up 17.8 percent year-on-year.