Funds News
- BOC scraps overseas fund after yuan rises
Date: 14-Feb-2007 Sources: (Xinhua Online)
BANK of China (BOC) has terminated an overseas investment fund about five months after its launch, after a sustained rise in the Chinese currency against the U.S. dollar dampened returns.
Analysts and domestic media said investors had been scrambling to cash in on the fund since it became open for redemption in November, amid a rapid appreciation of the yuan and China's tight restrictions on overseas products that such funds can buy.
The number of units in the fund had remained below 200 million since Jan. 12, triggering a termination clause, the bank said in a statement on its Web site. The fund will be liquidated within 20 working days.
The statement did not provide further details.
The fund raised 578.5 million yuan based on par value of 1 yuan per unit when it was launched in late July, the Shanghai Securities News said in a report.
The Chinese currency, the yuan, had risen a further 4.43 percent by early trade yesterday from its level after it was revalued by 2.1 percent per dollar July 21, 2005.
The government last year launched the Qualified Domestic Institutional Investor (QDII) scheme, which permits select financial firms to invest overseas on behalf of mainland residents, to encourage capital outflows and so ease upward pressure on the yuan.
The government has issued quotas totaling US$14 billion to 17 domestic and foreign firms under the QDII scheme.
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