Two new closed-end stock funds have won approval from the China Securities Regulatory Commission (CSRC), which ended a five-month freeze on new funds in an effort to brake the fall of domestic equities.
CCB Principal Asset Management Co. and China Southern Fund Management Co. will launch funds with ceilings of 6 billion and 8 billion shares, respectively, according to Saturday's Shanghai Securities News. The two funds would together raise about 14 billion yuan (US$1.95 billion) after the Spring Festival, which comes on Feb. 7.
People stand in front of an electronic board at a stock exchange in Nanjing, Jiangsu province January 21, 2008. [Agencies]
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The CSRC suspended the launch of new funds late last year in reaction to the surging domestic stock market. The Shanghai Composite Index nearly doubled last year.
But the benchmark index dipped to 4,320.77 points on Friday, nearly 30 percent off its record high reached in mid-October, as investors sold holdings due to concern over a possible US recession. The domestic stock market has seen volatile trading in recent weeks, with shares sinking more than 7 percent on Jan. 22, the largest percentage loss in seven and a half months.
More than 60 percent of the investment funds in China had losses in the fourth quarter that totaled 72.1 billion yuan. Figures from TX Investment Consulting Co. indicated that 215 funds managed by 58 companies disclosed losses in their fourth-quarter reports. These losses were the first for Chinese funds as a whole since the end of June 2005, when the stock market began a bull run.
