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Jul 15, 2020
News | Business | Finance: Chinese mutual fund industry sees jump in new funds and inflows
SHANGHAI
(Reuters) - China’s mutual fund industry saw another massive jump in
new products and subscriptions in June, suggesting the swift rally in
mainland stocks has room to run further.
FILE
PHOTO: An electronic board showing the Dow Jones and S&P 500
indexes, at Lujiazui financial district in Shanghai, China March 13,
2020. REUTERS/Aly Song/File Photo.
Some
73 new open-ended equity and balanced funds were launched in June,
taking the total to 4,110, data from the Asset Management Association of
China (AMAC) showed.
The net value of open-ended equity and
balanced funds stood at 4.2 trillion yuan ($599.5 billion) for the
month, up nearly 70% from 2.5 trillion yuan in the same period last
year, according to AMAC.
Analysts also confirmed the trend that has helped propel China’s stock market to five-year highs.
“There
are 639 mutual funds newly launched for the first half. I believe these
new funds add fuel to a strong rally in the A-share market,” said Xav
Feng, head of Asia Pacific Research, Lipper at Refinitiv.
Graphic: China's mutual fund industry grows rapidly here
Graphic: Number of Chinese mutual funds increased significantly here
Fund consultancy Z-Ben Advisors also pointed to intensive fundraising by mutual funds.
Mainland
mutual fund managers raised 157 billion yuan in June for equity and
balanced funds, which invest in both stocks and bonds, the highest
monthly fundraising in five years, the fund consultancy said.
Z-Ben
estimated there were outflows of 1.23 trillion yuan to 2 trillion yuan
from safe-haven money market funds in the second quarter as investors
switched to the stock market. [nL3N2EL0P5]
China’s CSI300
blue-chip index has risen to its highest in more than five years on
hopes of an economic recovery, Beijing’s continued reform of the capital
markets and monetary easing.
Graphic: China stocks rally as investors cheer reforms
Analysts
and fund managers said investors were investing more via funds as stock
picking had become more complicated for individuals due to
uncertainties such as the coronavirus outbreak and Sino-U.S.
geopolitical and economic tensions.
Investors in real estate and
wealth management products offered by banks, two traditional retail
investment channels, are being lured by the stock market rally.
The number of bond funds has also jumped this year.
In
a sign of retail frenzy for funds, China Universal Asset Management Co
launched a mid-cap investment fund on July 6, but suspended taking money
after just half a day of sales, so as to “limit the fund size to ensure
smooth operation after hot subscriptions” from investors.
“I am
at a loss now as everyone is talking about gains from stocks. Maybe I
could put some money into funds, as I’ve little knowledge about
investing,” a user said in a post on China’s Twitter-like Weibo.
($1 = 7.0060 Chinese yuan)
Reporting by Luoyan Liu and Andrew Galbraith; Editing by Vidya Ranganathan and Jacqueline Wong
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