Stock fund law expected
( 2002-09-02 10:37) (1)
The draft law on stock investment funds underwent a preliminary reading by the Standing Committee of the Ninth National People's Congress last week.
The legal framework is crucial to the healthy development of the country's fledging fund industry, which is anticipating accelerated growth.
After 10 years, there are 59 investment funds so far with 100 billion yuan (US$12 billion) of assets, accounting for 7 per cent of the country's capitalization of the domestic stock market.
As large institutional investors, the funds are believed to play an important role in stabilizing the stock market - it has often been hit by sharp fluctuations.
They are expected to create more investment alternatives for Chinese individuals who have deposited most of their funds in banks for a small interest return.
But problems and even scandals have emerged in the fledging industry, including unstandardized operations and imperfect internal management.
And some funds are engaged in short-term speculation of too many stocks, showing no sign of being responsible.
They have hurt investors' confidence.
The primary law for the fund industry will rebuild individual investors' confidence as it pays special attention to the protection of investors.
The draft law demands that investment companies make a timely disclosure of information on major issues, including investment structure.
The legislation will not only benefit domestic investors, but also provide legal foundations for foreigners as the country now allows them to set up joint venture fund management companies.
The law still needs time, but as it has entered the legislation procedure, it is not expected to take too long.
The sooner the better.
|
