Others News
- Regulator tells funds to rein in growth
Date: 6-Nov-2007 Sources: (Shenzhen Daily)
THE securities regulator has told the asset management industry to restrain the growth in size of its mutual funds, in order to reduce risks as millions of new investors enter the stock market.
In a notice carried on the front pages of domestic business newspapers yesterday, the China Securities Regulatory Commission warned against 'blind expansion?of funds by asset management firms that did not have the managerial and technical resources to ensure stability.
It told managers who were launching new funds, or expanding existing ones by distributing dividends or converting closed-end funds into open-ended products, to limit the size of their funds to advertised levels for six months after release of the prospectus.
The regulator also again warned funds against wild speculation in the stock market and improper practices such as pre-selling fund units before the official launch date. It urged funds to strengthen efforts to educate investors about risk.
China's mutual fund industry has ballooned to around 3 trillion yuan (US$400 million) from almost nothing at the start of this decade, thanks to a stock market bull run in the past two years.
New funds frequently attract several times their maximum targets of 10 billion yuan on the first day of sales.
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