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China to Launch First Open-ended Fund in September
Regulators have approved a September launch for China's first Western-style open-ended fund in a reform aimed at adding liquidity to the stock markets and opening new investment channels, state media said on Friday.
The China Securities Regulatory Commission (CSRC) gave the go-ahead for the launch of the Huaan Chuangxin Fund with an initial value of five billion yuan (US$600 million), the official Shanghai Securities News said.
The fund, run by China's Huaan Fund Management, would be sold to Chinese retail and institutional investors, initially with 60 per cent made available to individuals and 40 per cent to institutions, the newspaper said.
''The launch of the Huaan Chuangxin Fund will add new investment tools and open new liquidity channels,'' it said.
Huaan Fund Management said in a statement published in the newspaper the threshold for individual investors to bid for the new open-ended fund was 10,000 yuan with a maximum limit of 300,000 million yuan.
The minimum requirement for institutions was 300,000 yuan, with a cap of 500 million yuan, the statement said.
China now has nearly 40 closed-end securities mutual funds with a combined value of around 80 billion yuan.
All funds including the new open-ended fund target domestic investors and the country's A share markets, off limits to foreign investors.
China prohibits foreign fund management firms from operating in the domestic share market but has pledged to allow Sino-foreign joint venture fund firms equal access to the market after it joins the World Trade Organisation, expected by early 2000 at the latest.
Overseas asset managers have signed a slew of pacts to advise Chinese companies on fund management with an eye on forming joint ventures to tap the massive domestic A share market, with capitalisation of more than US$600 billion, after China joins the WTO.
Huaan, one of China's best-performing fund management companies, is being advised by JF Asset Management in preparing the launch of the open-ended fund.
The two sides have also announced intentions to set up a joint venture after Chinese rules permit.
Established in June 1998 under the sponsorship of Shanghai International Trust and Investment and four securities houses, Huaan now manages four closed-end funds with combined net assets of around nine billion yuan.
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