Funds News
- Credit Suisse JV to launch bond fund
Date: 24-Apr-2007 Sources: (Shenzhen Daily)
ICBC Credit Suisse Asset Management Co. said yesterday it will launch a bond fund this week to raise up to 5 billion yuan (US$647 million) to give Chinese investors a means of diversifying from rising stock market risks.
This would be the second bond fund approved by the government this year and the company expects the sale to be a success because risks in the A-share market are steepening after a bull run that started early last year, it said in a statement.
The Swiss bank's China fund joint venture said 80 percent of the fund would be invested in China's bond market, whose capitalization hit 9.25 trillion yuan by the end of 2006.
The remaining 20 percent will be invested in A-share initial public offerings on the primary market, the statement said.
IPO subscriptions tend to be a low-risk investment in China as they are usually priced at a discount to their listed peers. New stocks often post sharp gains in their first few trading days.
Other domestic mutual fund management firms are racing to issue equity funds, however, as a number of large companies list on the A-share market.
Annual returns from bond investments in China would likely average 4.5 percent. Industrial and Commercial Bank of China (ICBC) holds a 55 percent stake in the fund management joint venture. Credit Suisse has 25 percent and the remaining 20 percent is held by domestic shipping giant COSCO Group.
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