Chinesepod - Stock regulator's action cuts number of mutual funds issued

BIZCHINA / News

Stock regulator's action cuts number of mutual funds issued

(Shanghai Daily)
Updated: 2007-06-28 09:05

Chinese mainland money managers launched 24 mutual funds in the first
half of the year, against 49 issued in the same period of 2006, as the
regulator took action to cool the red-hot stock market, industry data
showed yesterday.

However, a sustained investment frenzy helped funds raise 192.86 billion
yuan (US$26.42 billion) between January and June, only slightly lower
than 195.42 billion yuan collected a year earlier, according to data
compiled by the Securities Times.

Chinese mainland yuan-denominated shares have climbed nearly 50 percent
in value so far this year after more than doubling in 2006 as domestic
citizens channeled bank savings into the red-hot stock market.

To prevent the market from overheating, the stock regulator has taken a
myriad of measures, including interest-rate hikes and a stamp-duty
increase, in an apparent attempt to curb short-term speculation.

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Industry sources have said that the watchdog started to tighten the
approval for the launch of new mutual funds late last year and ordered
money managers to limit the size of their products during initial sales.

"Authorities are supporting the growth of the fund industry in the long
haul as they hope to let institutional investors play a key role in
driving the market," said Hu Mingwei, a Citic Securities Co dealer.

"But for the near term, the regulator is likely to continue to control
the pace of approving sales of funds as it wishes to ease liquidity
pressure on the domestic market."

The China Securities Regulatory Commission on February 6 approved the
issuance of five equity funds, a move that came on the heels of a
12-percent drop in the key stock index in Shanghai starting late January.

(For more biz stories, please visit Industry Updates)

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