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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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I ndustry 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.

The stock watchdog on June 4 also approved the sales of four new equity-invested funds following a similar share slump after the Ministry of Finance on May 30 raised the stamp duty on share trading, starting a massive sell-off.
(For more biz stories, please visit Industries)
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