The Shanghai composite index rose 7.251 points to 1,863.78 with turnover standing at 7.2 billion yuan (US$869.5 million).

The Shenzhen composite sub-index lost 10.76 points to 3,861.09 with 4.8 billion yuan (US$579.9 million) traded.

Domestic A shares closed marginally higher as technology plays climbed on the launch of subscriptions for the 5 billion yuan (US$600 million) Hua'an Innovation Fund.

The Shanghai A-share index rose 0.4 per cent at 1,945.732 while the Shenzhen A index was up 0.13 per cent at 581.94.

Chinese investors plunged into A shares like e-commerce firm Jiangsu Zongyi, which soared to its 10 per cent daily limit to 16.94 yuan (US$2.05).

The fund's managers have said it will invest in innovative companies, including technology firms, from September 21 after the subscription closes.

Tech fever spilled over into B shares, open to foreigners, as display equipment maker CSG Technology and Shanghai Post Telecommunication closed up about 1 per cent.

CSG gained 1.36 per cent to HK$5.96 while Shanghai Post closed up 0.87 per cent at US$1.040.

The Shanghai B-share index edged up 0.15 per cent to 168.236 points as turnover dropped 28 per cent to a trickle of US$48.46 million.

Shenzhen B shares inched up 0.05 per cent to 286.17 as turnover waned 10 per cent to a skimpy HK$237.74 million.

Although the Western-style mutual fund will only buy A shares and domestic bonds, brokers said B-share technology firms were likely to track rises in A-share counterparts.

Trade in the hard-currency share markets is dominated by retail Chinese punters who usually take their cue from the much bigger A-share markets.

The first open-ended fund has become a sensation with domestic investors, who snapped up half its 3 billion yuan (US$360 million) retail subscription value within the first two hours of its launch on Tuesday.

Ignoring warnings about risk and markets floundering at 15-month lows, investors flocked to 139 Bank of Communications outlets in 13 Chinese cities for a crack at the 5 billion yuan open-ended Hua'an Innovation Fund.

Given the rush, the fund is certain to be sold out long before the one-week retail subscription period expires on September 18. Institutional investors can buy the remaining 2 billion yuan on September 19-20.

"The fund is selling very well," said a source close to Hua'an. "Each outlet received an average of more than 10 million yuan (US$1.2 million) in subscriptions within two hours this morning," he said. This translates to nearly half the total for retail investors.

The China Securities Regulatory Commission (CSRC) warned investors last week of the risks of buying the funds, saying they could face huge redemption pressures and even liquidation if the stock market kept falling.

China launched the fund in a bid to curb volatility and attract more institutional investors to the speculative markets, which now have only about 40 funds - all of them closed-ended and off limits to foreigners.

Nearly all these funds have seen their assets shrink in the year to date as the market has slumped.

Still, most investors were cautious due to an official campaign against market corruption that had hammered down the markets to a 15-month low by Friday, brokers said.

"Investors are not firmly optimistic about the market outlook - that's why the index did not rise much although tech stocks rallied," said analyst Guo Yong of GF Securities.

(China Daily 09/12/2001)